Publication
Title
Cash transfers and micro-enterprise performance : theory and quasi-experimental evidence from Kenya
Author
Abstract
Theoretically, the welfare effects of cash-based assistance depend on how businesses respond to the demand shock and on resulting effects on prices. Such market effects have been largely overlooked in the literature. In this study, we examine the business and price effects of cash-based assistance to refugees in Kenya. Monthly restricted cash transfers worth 3 to 13 dollars were provided to 400,000 refugees in the form of digital money exclusively usable for food purchases at licensed shops. We show that licensed businesses have much higher revenues (+175%) and profits (+154%) and charge higher prices than unlicensed businesses. In line with theory, the restricted cash transfer program created a parallel retail market in which a limited number of businesses enjoy high market power. The theoretical and empirical results provide a cautionary tale highlighting the drawbacks of setting up a less competitive, parallel market to distribute cash-based assistance.
Language
English
Source (journal)
Journal of development economics. - Amsterdam
Publication
Amsterdam : 2024
ISSN
0304-3878
DOI
10.1016/J.JDEVECO.2023.103232
Volume/pages
167 (2024) , p. 1-20
Article Reference
103232
ISI
001140199900001
Full text (Publisher's DOI)
Full text (open access)
UAntwerpen
Faculty/Department
Research group
Publication type
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Affiliation
Publications with a UAntwerp address
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Record
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Creation 11.12.2023
Last edited 01.02.2024
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