Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions
AbstractCan one teach entrepreneurship, or is it a fixed personal characteristic? Most academic and policy discussion on microentrepreneurs in developing countries focuses on their access to credit, and assumes their human capital to be fixed. However, a growing number of microfinance organizations are attempting to build the human capital of micro-entrepreneurs in order to improve the livelihood of their clients and help further their mission of poverty alleviation. Using a randomized control trial, we measure the marginal impact of adding business training to a Peruvian village banking program for female microentrepreneurs. Treatment groups received thirty to sixty minute entrepreneurship training sessions during their normal weekly or monthly banking meeting over a period of one to two years. Control groups remained as they were before, meeting at the same frequency but solely for making loan and savings payments. We find that the treatment led to improved business knowledge, practices and revenues. The microfinance institution also had direct benefits through higher repayment and client retention rates. Larger effects found for those that expressed less interest in training in a baseline survey have important implications for implementing similar market-based interventions with a goal of recovering costs.
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Bibliographic InfoPaper provided by Economic Growth Center, Yale University in its series Working Papers with number 941.
Length: 44 pages
Date of creation: Jul 2006
Date of revision:
entrepreneurship; microfinance; business training; business skills; adult education;
Other versions of this item:
- Dean Karlan & Martin Valdivia, 2011. "Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 510-527, May.
- Dean Karlan & Martin Valdivia, 2007. "Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions," Working Papers 107, Center for Global Development.
- Dean Karlan & Martin Valdivia, 2006. "Teaching entrepreneurship: Impact of business training on microfinance clients and institutions," Natural Field Experiments 00282, The Field Experiments Website.
- C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-28 (All new papers)
- NEP-BEC-2006-07-28 (Business Economics)
- NEP-CSE-2006-07-28 (Economics of Strategic Management)
- NEP-DEV-2006-07-28 (Development)
- NEP-EDU-2006-07-28 (Education)
- NEP-ENT-2006-07-28 (Entrepreneurship)
- NEP-FMK-2006-07-28 (Financial Markets)
- NEP-HRM-2006-07-28 (Human Capital & Human Resource Management)
- NEP-MFD-2006-07-28 (Microfinance)
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