Paper

Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions

Building the human capital of micro-entrepreneurs
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This paper uses a randomized control trial to measure the marginal impact of adding business training to a Peruvian group lending program for female microentrepreneurs.

As a part of the trial, groups received 30-60 minutes of entrepreneurship training sessions during their normal weekly or monthly banking meeting over a period of one to two years. Findings include:

  • Basic training can lead to higher profits, even though the participants are pre-existing clients and experienced microentrepreneurs;
  • Control groups remained as they were before, meeting at the same frequency, but solely for making loan and savings payments;
  • Program increased client retention rates for the MFI.

The paper also finds suggestive evidence that effects were larger for microentrepreneurs who expressed less interest in training before the program commenced. This has important implications for implementing similar market-based interventions with a goal of recovering costs.

About this Publication

By Karlan, D. & Valdivia, M.
Published