Do Transaction Costs Avert Livelihoods? An Empirical Study of Samurdhi Beneficiaries in Sri Lanka

Abstract

This study empirically investigates the impact of Transaction Cost (TC) determinants on the livelihood success of Samurdhi beneficiaries in Sri Lanka. Data was collected from 1820 beneficiaries, employing a structural questionnaire and conducting face-to-face interviews. Partial Least Squares-Structural Equation Modelling (PLS-SEM) was utilized to analyse the data. The empirical results discovered that uncertainty and asset specificity had made insignificant effects though other determinants have influenced significantly on the livelihood success of the Samurdhi beneficiaries. The study found that bounded rationality has a significantly higher negative impact on livelihood success and increases opportunism, affects livelihood success. TC as the mediating variable also significantly reduces livelihood success. It heightens the negative effect of TC determinants on livelihood success, except for asset specificity. Thus, the study identified that making appropriate information flow removes information asymmetry and reduces bounded rationality of Samurdhi beneficiaries, thereby increasing livelihood success. Further, the study may enable evolving strategies to mitigate TC by improving the rational ability and transaction frequency; both helping to avoid the opportunistic behavior of exchange partners and decreasing the transaction uncertainty that leads to improving the livelihoods of Samurdhi beneficiaries.