IDEAS home Printed from https://ideas.repec.org/a/eee/wdevel/v105y2018icp189-200.html
   My bibliography  Save this article

Returns to microcredit, cash grants and training for male and female microentrepreneurs in Uganda

Author

Listed:
  • Fiala, Nathan

Abstract

Experimental tests of microfinance programs have found little or no impacts on business and household income outcomes. I present experimental evidence that the gender of the individual receiving a loan matters for the impacts measured. Microenterprise owners were randomly offered either capital with repayment (discounted loans) or without (grants) and were randomly chosen to receive business skills training in conjunction with the capital. I find no short-run effects for female-owned enterprises from either form of capital or the training. However, I find large effects on profits and sales for male-owned enterprises that were offered loans. There is no effect for men from the grants, suggesting repayment requirements increased the likelihood of productive investment. The results indicate that cash-constrained men—a sample that is not traditionally targeted by microcredit organizations—can benefit from subsidized microfinance.

Suggested Citation

  • Fiala, Nathan, 2018. "Returns to microcredit, cash grants and training for male and female microentrepreneurs in Uganda," World Development, Elsevier, vol. 105(C), pages 189-200.
  • Handle: RePEc:eee:wdevel:v:105:y:2018:i:c:p:189-200
    DOI: 10.1016/j.worlddev.2017.12.027
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305750X17304205
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.worlddev.2017.12.027?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. 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.
    2. Dean Karlan, Ryan Knight, and Christopher Udry, 2012. "Hoping to Win, Expected to Lose: Theory and Lessons on Microenterprise Development," Working Papers 312, Center for Global Development.
    3. Greg Fischer, 2013. "Contract Structure, Risk‐Sharing, and Investment Choice," Econometrica, Econometric Society, vol. 81(3), pages 883-939, May.
    4. Britta Augsburg & Ralph De Haas & Heike Harmgart & Costas Meghir, 2015. "The Impacts of Microcredit: Evidence from Bosnia and Herzegovina," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 183-203, January.
    5. Jaikishan Desai & Kristin Johnson & Alessandro Tarozzi, 2013. "On the Impact of Microcredit: Evidence from a Randomized Intervention in Rural Ethiopia," Working Papers 741, Barcelona School of Economics.
    6. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-591, May.
    7. Pamela Jakiela & Owen Ozier, 2016. "Does Africa Need a Rotten Kin Theorem? Experimental Evidence from Village Economies," Review of Economic Studies, Oxford University Press, vol. 83(1), pages 231-268.
    8. Grimm, Michael & Hartwig, Renate & Lay, Jann, 2017. "Does forced solidarity hamper investment in small and micro enterprises?," Journal of Comparative Economics, Elsevier, vol. 45(4), pages 827-846.
    9. Jeffrey R Kling & Jeffrey B Liebman & Lawrence F Katz, 2007. "Experimental Analysis of Neighborhood Effects," Econometrica, Econometric Society, vol. 75(1), pages 83-119, January.
    10. Nicholas Bloom & Benn Eifert & Aprajit Mahajan & David McKenzie & John Roberts, 2013. "Does Management Matter? Evidence from India," The Quarterly Journal of Economics, Oxford University Press, vol. 128(1), pages 1-51.
    11. Erica Field & Rohini Pande & John Papp & Natalia Rigol, 2013. "Does the Classic Microfinance Model Discourage Entrepreneurship among the Poor? Experimental Evidence from India," American Economic Review, American Economic Association, vol. 103(6), pages 2196-2226, October.
    12. Suresh de Mel & David McKenzie & Christopher Woodruff, 2009. "Returns to Capital in Microenterprises: Evidence from a Field Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 124(1), pages 423-423.
    13. Lars Ivar Oppedal Berge & Kjetil Bjorvatn & Bertil Tungodden, 2015. "Human and Financial Capital for Microenterprise Development: Evidence from a Field and Lab Experiment," Management Science, INFORMS, vol. 61(4), pages 707-722, April.
    14. Fafchamps, Marcel & McKenzie, David & Quinn, Simon & Woodruff, Christopher, 2014. "Microenterprise growth and the flypaper effect: Evidence from a randomized experiment in Ghana," Journal of Development Economics, Elsevier, vol. 106(C), pages 211-226.
    15. Lori Beaman & Dean Karlan & Bram Thuysbaert & Christopher Udry, 2014. "Selection into Credit Markets: Evidence from Agriculture in Mali," NBER Working Papers 20387, National Bureau of Economic Research, Inc.
    16. Bruno Crépon & Florencia Devoto & Esther Duflo & William Parienté, 2015. "Estimating the Impact of Microcredit on Those Who Take It Up: Evidence from a Randomized Experiment in Morocco," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 123-150, January.
    17. Beaman, Lori & Karlan, Dean & Thuysbaert, Bram & Udry, Christopher, 2014. "Self-Selection into Credit Markets: Evidence from Agriculture in Mali," Working Papers 135, Yale University, Department of Economics.
    18. Robert Cull & Asli Demirguç-Kunt & Jonathan Morduch, 2007. "Financial performance and outreach: a global analysis of leading microbanks," Economic Journal, Royal Economic Society, vol. 117(517), pages 107-133, February.
    19. McKenzie, David, 2012. "Beyond baseline and follow-up: The case for more T in experiments," Journal of Development Economics, Elsevier, vol. 99(2), pages 210-221.
    20. Abhijit Banerjee & Esther Duflo & Rachel Glennerster & Cynthia Kinnan, 2015. "The Miracle of Microfinance? Evidence from a Randomized Evaluation," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 22-53, January.
    21. Mano, Yukichi & Iddrisu, Alhassan & Yoshino, Yutaka & Sonobe, Tetsushi, 2012. "How Can Micro and Small Enterprises in Sub-Saharan Africa Become More Productive? The Impacts of Experimental Basic Managerial Training," World Development, Elsevier, vol. 40(3), pages 458-468.
    22. Cho, Yoon Y. & Kalomba, Davie & Mobarak, Ahmed Mushfiq & Orozco, Victor, 2013. "Gender Differences in the Effects of Vocational Training: Constraints on Women and Drop-Out Behavior," IZA Discussion Papers 7408, Institute of Labor Economics (IZA).
    23. de Mel, Suresh & McKenzie, David J. & Woodruff, Christopher, 2009. "Measuring microenterprise profits: Must we ask how the sausage is made?," Journal of Development Economics, Elsevier, vol. 88(1), pages 19-31, January.
    24. Pablo Fajnzylber & William Maloney & Gabriel Montes Rojas, 2006. "Microenterprise Dynamics in Developing Countries: How Similar are They to Those in the Industrialized World? Evidence from Mexico," The World Bank Economic Review, World Bank Group, vol. 20(3), pages 389-419.
    25. Fischer, Gregory, 2013. "Contract structure, risk sharing and investment choice," LSE Research Online Documents on Economics 46796, London School of Economics and Political Science, LSE Library.
    26. David S. Lee, 2002. "Trimming for Bounds on Treatment Effects with Missing Outcomes," NBER Technical Working Papers 0277, National Bureau of Economic Research, Inc.
    27. repec:oup:qjecon:v:129:y:2014:i:2:p:697-752. is not listed on IDEAS
    28. Christopher Blattman & Nathan Fiala & Sebastian Martinez, 2014. "Generating Skilled Self-Employment in Developing Countries: Experimental Evidence from Uganda," The Quarterly Journal of Economics, Oxford University Press, vol. 129(2), pages 697-752.
    29. Lori Beaman, Dean Karlan, Bram Thuysbaert, and Christopher Udry, 2014. "Self-Selection into Credit Markets: Evidence from Agriculture in Mali - Working Paper 377," Working Papers 377, Center for Global Development.
    30. Narayana R. Kocherlakota, 1996. "Implications of Efficient Risk Sharing without Commitment," Review of Economic Studies, Oxford University Press, vol. 63(4), pages 595-609.
    31. Erhard Berner & Georgina Gomez & Peter Knorringa, 2012. "‘Helping a Large Number of People Become a Little Less Poor’: The Logic of Survival Entrepreneurs," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 24(3), pages 382-396, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Islam, Asad & Lee, Wang-Sheng & Triyana, Margaret & Xia, Xing, 2023. "Improving Health and Safety in the Informal Sector: Evidence from a Randomized Trial in Bangladesh," IZA Discussion Papers 16150, Institute of Labor Economics (IZA).
    2. Giambra, Samuele & McKenzie, David, 2021. "Self-employment and migration," World Development, Elsevier, vol. 141(C).
    3. John Kuada, 2021. "Financial Inclusion and Small Enterprise Growth in Africa: Emerging Perspectives and Research Agenda," Working Papers of the African Governance and Development Institute. 21/084, African Governance and Development Institute..
    4. Sedlmayr, Richard & Shah, Anuj & Sulaiman, Munshi, 2020. "Cash-plus: Poverty impacts of alternative transfer-based approaches," Journal of Development Economics, Elsevier, vol. 144(C).
    5. Kumar, Neha & Raghunathan, Kalyani & Arrieta, Alejandra & Jilani, Amir & Pandey, Shinjini, 2021. "The power of the collective empowers women: Evidence from self-help groups in India," World Development, Elsevier, vol. 146(C).
    6. Blattman, Christopher & Dercon, Stefan & Franklin, Simon, 2022. "Impacts of industrial and entrepreneurial jobs on youth: 5-year experimental evidence on factory job offers and cash grants in Ethiopia," Journal of Development Economics, Elsevier, vol. 156(C).
    7. Fiala, Nathan & Rose, Julian & Aryemo, Filder & Peters, Jörg, 2022. "The (very) long-run impacts of cash grants during a crisis," Ruhr Economic Papers 961, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Edmonds, Eric & Theoharides, Caroline, 2020. "The short term impact of a productive asset transfer in families with child labor: Experimental evidence from the Philippines," Journal of Development Economics, Elsevier, vol. 146(C).
    9. Calderone, Margherita & Fiala, Nathan & Melyoki, Lemayon Lemilia & Schoofs, Annekathrin & Steinacher, Rachel, 2022. "Making intense skills training work at scale: Evidence on business and labor market outcomes in Tanzania," Ruhr Economic Papers 950, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    10. John Kuada, 2021. "Financial Inclusion and Small Enterprise Growth in Africa: Emerging Perspectives and Research Agenda," Research Africa Network Working Papers 21/084, Research Africa Network (RAN).
    11. Oladipo, Oluwasheyi S. & Shim, Hyoung Suk, 2022. "Microentrepreneurs' Gender Difference in Labor Demand," IZA Discussion Papers 15690, Institute of Labor Economics (IZA).
    12. Lenel, Friederike & Priebe, Jan & Satriawan, Elan & Syamsulhakim, Ekki, 2022. "Can mHealth campaigns improve CCT outcomes? Experimental evidence from sms-nudges in Indonesia," Journal of Health Economics, Elsevier, vol. 86(C).
    13. John Kuada, 2021. "Financial Inclusion and Small Enterprise Growth in Africa: Emerging Perspectives and Research Agenda," Working Papers 21/084, European Xtramile Centre of African Studies (EXCAS).
    14. Keijiro Otsuka, 2020. "Strategy for Cluster-Based Industrial Development in Developing Countries," Discussion Papers 2019, Graduate School of Economics, Kobe University.
    15. Grover,Arti Goswami & Imbruno,Michele, 2020. "Using Experimental Evidence to Inform Firm Support Programs in Developing Countries," Policy Research Working Paper Series 9461, The World Bank.
    16. Bensch, Gunther & Kluve, Jochen & Stöterau, Jonathan, 2021. "The market-based dissemination of energy-access technologies as a business model for rural entrepreneurs: Evidence from Kenya," Resource and Energy Economics, Elsevier, vol. 66(C).
    17. Oriana Bandiera & Robin Burgess & Erika Deserranno & Ricardo Morel & Imran Rasul & Munshi Sulaiman & Jack Thiemel, 2022. "Microfinance and Diversification," Economica, London School of Economics and Political Science, vol. 89(S1), pages 239-275, June.
    18. Grimm, Michael & Soubeiga, Sidiki & Weber, Michael, 2021. "Short-Term Impacts of Targeted Cash Grants and Business Development Services: Experimental Evidence from Entrepreneurs in Burkina Faso," IZA Discussion Papers 14892, Institute of Labor Economics (IZA).
    19. M. Shahe Emran & A. K. M. Mahbub Morshed & Joseph E. Stiglitz, 2021. "Microfinance and missing markets," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 34-67, February.
    20. Arielle Bernhardt & Erica Field & Rohini Pande & Natalia Rigol, 2019. "Household Matters: Revisiting the Returns to Capital among Female Microentrepreneurs," American Economic Review: Insights, American Economic Association, vol. 1(2), pages 141-160, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nathan Fiala, 2015. "Economic Consequences of Forced Displacement," Journal of Development Studies, Taylor & Francis Journals, vol. 51(10), pages 1275-1293, October.
    2. Fiala, Nathan., 2015. "Access to finance and enterprise growth : evidence from an experiment in Uganda," ILO Working Papers 994874063402676, International Labour Organization.
    3. Nathan Fiala, 2017. "Business is Tough, but Family is Worse: Household Bargaining and Investment in Microenterprises in Uganda," Working papers 2017-05, University of Connecticut, Department of Economics.
    4. Karlan, Dean & Knight, Ryan & Udry, Christopher, 2015. "Consulting and capital experiments with microenterprise tailors in Ghana," Journal of Economic Behavior & Organization, Elsevier, vol. 118(C), pages 281-302.
    5. Marshall Burke & Lauren Falcao Bergquist & Edward Miguel, 2018. "Sell Low and Buy High: Arbitrage and Local Price Effects in Kenyan Markets," NBER Working Papers 24476, National Bureau of Economic Research, Inc.
    6. Oriana Bandiera & Robin Burgess & Erika Deserranno & Ricardo Morel & Imran Rasul & Munshi Sulaiman & Jack Thiemel, 2022. "Microfinance and Diversification," Economica, London School of Economics and Political Science, vol. 89(S1), pages 239-275, June.
    7. David McKenzie & Christopher Woodruff, 2014. "What Are We Learning from Business Training and Entrepreneurship Evaluations around the Developing World?," The World Bank Research Observer, World Bank Group, vol. 29(1), pages 48-82.
    8. Lucia Dalla Pellegrina & Giorgio Di Maio & Paolo Landoni & Emanuele Rusinà, 2021. "Money management and entrepreneurial training in microfinance: impact on beneficiaries and institutions," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(3), pages 1049-1085, October.
    9. Maitra, Pushkar & Mani, Subha, 2017. "Learning and earning: Evidence from a randomized evaluation in India," Labour Economics, Elsevier, vol. 45(C), pages 116-130.
    10. Gabriela Calderon & Jesse M. Cunha & Giacomo De Giorgi, 2020. "Business Literacy and Development: Evidence from a Randomized Controlled Trial in Rural Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 68(2), pages 507-540.
    11. Lars Ivar Oppedal Berge & Kjetil Bjorvatn & Bertil Tungodden, 2015. "Human and Financial Capital for Microenterprise Development: Evidence from a Field and Lab Experiment," Management Science, INFORMS, vol. 61(4), pages 707-722, April.
    12. Nakasone, Eduardo & Torero, Maximo, 2014. "Soap Operas for for Female Micro Entrepreneur Training," MPRA Paper 61302, University Library of Munich, Germany.
    13. Grover,Arti Goswami & Imbruno,Michele, 2020. "Using Experimental Evidence to Inform Firm Support Programs in Developing Countries," Policy Research Working Paper Series 9461, The World Bank.
    14. Ahlin, Christian & Gulesci, Selim & Madestam, Andreas & Stryjan, Miri, 2020. "Loan contract structure and adverse selection: Survey evidence from Uganda," Journal of Economic Behavior & Organization, Elsevier, vol. 172(C), pages 180-195.
    15. Caio Piza & Tulio Antonio Cravo & Linnet Taylor & Lauro Gonzalez & Isabel Musse & Isabela Furtado & Ana C. Sierra & Samer Abdelnour, 2016. "The Impact of Business Support Services for Small and Medium Enterprises on Firm Performance in Low‐ and Middle‐Income Countries: A Systematic Review," Campbell Systematic Reviews, John Wiley & Sons, vol. 12(1), pages 1-167.
    16. Eduardo Nakasone & Maximo Torero, 2014. "Soap Operas for Female Micro Entrepreneur Training," IDB Publications (Working Papers) 87916, Inter-American Development Bank.
    17. Stephen J. Anderson & Rajesh Chandy & Bilal Zia, 2018. "Pathways to Profits: The Impact of Marketing vs. Finance Skills on Business Performance," Management Science, INFORMS, vol. 64(12), pages 5559-5583, December.
    18. Sutter, Christopher & Bruton, Garry D. & Chen, Juanyi, 2019. "Entrepreneurship as a solution to extreme poverty: A review and future research directions," Journal of Business Venturing, Elsevier, vol. 34(1), pages 197-214.
    19. Simone Schaner, 2018. "The Persistent Power of Behavioral Change: Long-Run Impacts of Temporary Savings Subsidies for the Poor," American Economic Journal: Applied Economics, American Economic Association, vol. 10(3), pages 67-100, July.
    20. Teresa Molina Millan & Karen Macours, 2017. "Attrition in randomized control trials: Using tracking information to correct bias," NOVAFRICA Working Paper Series wp1702, Universidade Nova de Lisboa, Nova School of Business and Economics, NOVAFRICA.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:105:y:2018:i:c:p:189-200. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/locate/worlddev .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/worlddev .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.