Your kindness and generosity repays itself in full, as Genghis Khan, occupied by other wars and conflicts, never turns on you. Your people prosper from the riches that the Mongols bring to your empire, and you go down as one of the shrewdest rulers of your era. Your dispute about the title of Shah with the Abbasid Caliph in Baghdad is soon put to an end, too, when Genghis Khan sacks the city.
You chose a non-historical decision! In real life, the merchants were arrested. Whether that was at the order of the Shah or whether the governor was acting on his own will likely never be known for sure, but nonetheless it led to the downfall of the Khwarazmian Empire. Read more about how your decisions differed here.