Financial Economics

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Gendered Effects of Climate Shock, Formal and Informal Financial Institutions, and Welfare in Post-Conflict Somalia
(African Economic Research Consortium, 2022-10) Mesfin, Hiwot; Ahmed, Musa Hasen
This study investigates the impact of climate shock on Somali households’ welfare status, and examines the mediating roles of formal and informal financial institutions— mobile banking and remittances—in enhancing households’ coping capacity. Using representative panel data, we show that climate shock has adverse effects on multiple welfare indicators for both female- and male-headed households. However, we find that female-headed households are more likely to fall below the poverty line, have a larger poverty depth, and shift their diet due to climate shock than male-headed households. Interestingly, we find that remittances decrease following climate shock, both on average and for female-headed households, but such reduction does not have a significant adverse effect on the households’ coping ability. This could be an indication that Somali households rely on other coping mechanisms to shocks than remittances. Similarly, even though we find that mobile money increases the likelihood of receiving remittances, we find no evidence that this translates into a higher coping ability to climate shock. Further investigation is needed to identify Somali households’ coping strategies