Price dispersion in the remittance industry: The role of fintech, comparison shopping, and other factors

Remittances to developing countries surpassed US$ 550 billion in 2019. Several micro-level studies have reported impacts of remittances on recipient households. So, there have been claims to reduce the price of sending money. Comparison websites, i.e., platforms like kayak.com but for sending money, have been proposed as a potential tool for reducing remittances prices; however, their impacts are likely to depend on the market failure in question. For example, if migrant consumers shop or search inefficiently, comparison websites are more likely to have an impact. On the other hand, if the market inefficiency is primarily driven by supply-side barriers such as the last-mile problem or regulation, comparison websites are less likely to have an impact. This project will assess whether comparison websites, and comparison shopping more generally, have the potential to impact the demand and supply sides of the remittance industry. In so doing, it will seek to describe consumer, firm, and industry characteristics that may moderate such impacts. The project will have three stages. The first stage, which is laid out in this version of the pre-analysis plan (PAP), will exploit existing data to do a first pass on the research questions. The second stage, which will be pre-registed as an updated version of this PAP, will collect primary data and additional secondary data to pin down causal factors. The final stage will incorporate findings from the first two stages to assess potential welfare impacts.