Both labour migration and the associated remittances are increasing in scale and significance. As a result, they receive close attention from policy makers and international organizations. This thesis explores the issues related to the measurement of remittances, the determinants of remittances, and the impact of remittances on the financial system in the transition countries of Central and Eastern Europe and the former Soviet Union. The encompassing theme of the thesis is the empirical interplay between remittances, various economic parameters, and financial systems. The paucity of research on the role of remittances in the economies of transition countries has prevented the development of a meaningful policy response to this massive inflow of funds into the economies of these countries. This thesis contributes towards filling this gap in the research and presents four studies, which provide insights into the methodology of estimating remittances, as well as the relationships between remittances, the transaction costs associated with sending remittances, the economy, and the financial system.