Theoretically, the effect of household cash transfers depends on how businesses respond to the demand shock and on the resulting effect on prices. Such market effects have been largely overlooked in the literature, which mostly focuses on direct impacts on households. We study the impact of a household cash transfer program on retail businesses operating in two refugee sites in Kenya. Refugees receive a monthly mobile money transfer that can only be spent at licensed businesses. We compare licensed and unlicensed businesses, using matching methods to control for all variables considered in the licensing process. We show that licensed businesses have much higher revenues and profits and charge higher prices than unlicensed businesses. The cash transfer program created a parallel retail market in which a limited number of businesses enjoy high market power. We identify a series of market imperfections explaining the results.
Publishing Organizations: Refugee Self-Reliance Initiative
Author(s): Climate Risks and Self-Reliance Technical Working Group (TWG)
Publishing Organizations: International Institute for Environment and Development (IIED)
Author(s): Boel McAteer and Kellie Leeson
Publishing Organizations: International Rescue Committee (IRC) RE:BUiLD Program
Author(s): Author: Everlyn Kaumba with contributions from Priscilla Dembetembe, Belinda Muya, Elizabeth Mukami, Victor Otsimi, David Musiime, and Ned Meerdink
Publishing Organizations: Refugee Self-Reliance Initiative
Author(s): Sasha Muench
Publishing Organizations: Refugee Self-Reliance Initiative, RefugePoint, RELON Uganda, and R-SEAT
Publishing Organizations: Cohere
Author(s): Diana Essex-Lettieri; Julia Zahreddine
Publishing Organizations: Refugee Self-Reliance Initiative
Author(s): Dr. Evan Easton-Calabria
Publishing Organizations: Refugee Self-Reliance Initiative
Authors: Refugee Self-Reliance Market Systems Development Working Group
Publishing Organizations: RefugePoint and the Refugee Self-Reliance Initiative in partnership with refugee-led organizations operating in Nairobi, Kenya
Publishing Organizations: GIZ, WINS Global Consult