Inventory decisions under political violence
File(s)
Published version
Author(s)
Custódio, Cláudia
Mendes, Bernardo
Mendes, Diogo
Type
Journal Article
Abstract
We estimate the effect of violent political conflicts on firm inventory purchase decisions using monthly data of 431 clients of a multinational beverage supplier in Mozambique. Firms reduce inventory purchases by up to 19% in response to conflicts occurring within a 10 km radius. This is observed exclusively among small firms, which reduce their purchases by 28%–32% compared to larger firms. Small firms are also more likely to temporarily or permanently halt their purchases. However, conditional on survival, the effect is short-lived. Our results underscore the disproportionate impact of political violence on small firms, potentially widening the gap between small and large businesses in developing economies.
Date Issued
2025-02-01
Date Acceptance
2024-12-28
Citation
Economics Letters, 2025, 247
ISSN
0165-1765
Publisher
Elsevier
Journal / Book Title
Economics Letters
Volume
247
Copyright Statement
© 2025 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
License URL
Sponsor
Imperial College London
Imperial College London
Identifier
https://doi.org/10.1016/j.econlet.2024.112158
Subjects
14 Economics
Economics
Publication Status
Published
Article Number
112158
Date Publish Online
2025-01-07