Working Paper: CEPR ID: DP15294
Authors: Claudia Custodio; Diogo Mendes; Daniel Metzger
Abstract: This paper studies the impact of a course in "Finance" for top managers of medium and large enterprises in Mozambique through a randomized controlled trial (RCT). Survey data and accounting data provide consistent evidence that managers change firm financial policies in response to finance education. The largest treatment ef- fect is on short-term financial policies related to working capital. Reductions in accounts receivable and inventories generate an increase in cash flows used to finance long-term investments. Those policy changes also improve the performance of the treated firms. Overall, our results suggest that relatively small and low-cost interventions, such as a standard executive education program in finance, can help firms to mitigate financial constraints and potentially affect economic development.
Keywords: Financial Literacy; Financial Education; RCT; Financing Constraints; CEOs
JEL Codes: D4; G30; J24; L25; M41; O16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Reduction in accounts receivable (M41) | Increase in cash flows available for long-term investments (G31) |
| Reduction in inventories (D25) | Increase in cash flows available for long-term investments (G31) |
| Reduction in working capital (D25) | Improved liquidity (G19) |
| Financial education program (G53) | Reduction in accounts receivable (M41) |
| Financial education program (G53) | Reduction in inventories (D25) |
| Financial education program (G53) | Reduction in working capital (D25) |
| Financial education program (G53) | Increase in capital expenditures (G31) |
| Financial education program (G53) | Increase in return on assets (ROA) (G32) |
| Financial education program (G53) | Positive effect on firm performance (L25) |
| Financial education program (G53) | No adverse effects on sales growth (F69) |