Working Paper: CEPR ID: DP7994
Authors: Alejandro Drexler; Greg Fischer; Antoinette S. Schoar
Abstract: Individuals and business owners engage in an increasingly complex array of financial decisions that are critical for their success and well-being. Yet a growing literature documents that in both developed and developing countries, a large fraction of the population is unprepared to make these decisions. Evidence on potential remedies is limited and mixed. Two randomized trials test the impact of financial training on firm-level and individual outcomes for microentrepreneurs in the Dominican Republic. We find no significant effect from a standard, fundamentals-based accounting training. However, a simplified, rule-of-thumb training produced significant and economically meaningful improvements in business practices and outcomes.
Keywords: Adult education; Business training; Entrepreneurship; Financial literacy
JEL Codes: D93; D14; D21; I21; J24; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| rule-of-thumb training (M53) | financial management practices (G32) |
| rule-of-thumb training (M53) | business performance (L25) |
| rule-of-thumb training (M53) | savings (D14) |
| basic accounting training (M41) | business practices (M14) |
| follow-on training (M53) | implementation of practices (basic accounting) (M41) |
| rule-of-thumb techniques (C51) | financial outcomes (G39) |