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Stimulating managerial capital in emerging markets : the impact of business and financial literacy for young entrepreneurs

Author

Listed:
  • Bruhn, Miriam
  • Zia, Bilal

Abstract

Identifying the determinants of entrepreneurship is an important research and policy goal, especially in emerging market economies where lack of capital and supporting infrastructure often imposes stringent constraints on business growth. This paper studies the impact of a comprehensive business and financial literacy program on firm outcomes of young entrepreneurs in an emerging post-conflict economy, Bosnia and Herzegovina. The authors conduct a randomized control trial and find that while the training program did not influence business survival, it significantly improved business practices, investments, and loan terms for surviving businesses. Entrepreneurs with higher ex-ante financial literacy further exhibited some improvements in business performance and sales.

Suggested Citation

  • Bruhn, Miriam & Zia, Bilal, 2011. "Stimulating managerial capital in emerging markets : the impact of business and financial literacy for young entrepreneurs," Policy Research Working Paper Series 5642, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5642
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    References listed on IDEAS

    as
    1. Klapper, Leora & Lusardi, Annamaria & Panos, Georgios A., 2012. "Financial literacy and the financial crisis," Policy Research Working Paper Series 5980, The World Bank.
    2. Shawn Cole & Thomas Sampson & Bilal Zia, 2011. "Prices or Knowledge? What Drives Demand for Financial Services in Emerging Markets?," Journal of Finance, American Finance Association, vol. 66(6), pages 1933-1967, December.
    3. repec:pse:psecon:2010-29 is not listed on IDEAS
    4. Miriam Bruhn & David McKenzie, 2009. "In Pursuit of Balance: Randomization in Practice in Development Field Experiments," American Economic Journal: Applied Economics, American Economic Association, vol. 1(4), pages 200-232, October.
    5. Miriam Bruhn & Dean Karlan & Antoinette Schoar, 2010. "What Capital Is Missing in Developing Countries?," American Economic Review, American Economic Association, vol. 100(2), pages 629-633, May.
    6. repec:dau:papers:123456789/5380 is not listed on IDEAS
    7. Milo Bianchi & Matteo Bobba, 2010. "Liquidity, risk and occupational choices," PSE Working Papers halshs-00564918, HAL.
    8. Bruhn, Miriam & Love, Inessa, 2009. "The economic impact of banking the unbanked : evidence from Mexico," Policy Research Working Paper Series 4981, The World Bank.
    9. Matteo Bobba, 2013. "Liquidity, Risk, and Occupational Choices," Review of Economic Studies, Oxford University Press, vol. 80(2), pages 491-511.
    10. Paul J. Gertler & Sebastian W. Martinez & Marta Rubio-Codina, 2012. "Investing Cash Transfers to Raise Long-Term Living Standards," American Economic Journal: Applied Economics, American Economic Association, vol. 4(1), pages 164-192, January.
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    Citations

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    Cited by:

    1. Alexandria Valerio & Brent Parton & Alicia Robb, 2014. "Entrepreneurship Education and Training Programs around the World : Dimensions for Success," World Bank Publications, The World Bank, number 18031, March.
    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. Christopher B. Bumcrot & Judy Lin & Annamaria Lusardi, 2011. "The Geography of Financial Literacy," Working Papers 893, RAND Corporation.
    4. Gabriela Calderón & Jesse M. Cunha & Giacomo De Giorgi, 2013. "Business Literacy and Development: Evidence From a Randomized Controlled Trial in Rural Mexico," Working Papers 742, Barcelona Graduate School of Economics.
    5. Dean Karlan, Aishwarya Lakshmi Ratan, Jonathan Zinman, 2013. "Savings by and for the Poor: A Research Review and Agenda-Working Paper 346," Working Papers 346, Center for Global Development.
    6. 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).
    7. Valdivia, Martín, 2015. "Business training plus for female entrepreneurship? Short and medium-term experimental evidence from Peru," Journal of Development Economics, Elsevier, vol. 113(C), pages 33-51.
    8. Miriam Bruhn & Dean Karlan & Antoinette Schoar, 2018. "The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico," Journal of Political Economy, University of Chicago Press, vol. 126(2), pages 635-687.
    9. Wim Naudé, 2011. "Foreign Aid for Innovation: The Missing Ingredient in Private Sector Development?," Working Papers 2011/35, Maastricht School of Management.
    10. Britta Augsburg & Ralph De Haas & Heike Harmgart & Costas Meghir, 2012. "Microfinance, Poverty and Education," IFS Working Papers W12/15, Institute for Fiscal Studies.
    11. Cho, Yoonyoung & Honorati, Maddalena, 2014. "Entrepreneurship programs in developing countries: A meta regression analysis," Labour Economics, Elsevier, vol. 28(C), pages 110-130.
    12. Christopher B. Bumcrot & Judy Lin & Annamaria Lusardi, 2011. "The Geography of Financial Literacy," Working Papers WR-893-SSA, RAND Corporation.
    13. 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.
    14. repec:bla:rdevec:v:21:y:2017:i:4:p:1205-1228 is not listed on IDEAS
    15. Schicks, Jessica, 2014. "Over-Indebtedness in Microfinance – An Empirical Analysis of Related Factors on the Borrower Level," World Development, Elsevier, vol. 54(C), pages 301-324.
    16. World Bank, 2014. "More Jobs, Better Jobs : A Priority for Egypt," World Bank Other Operational Studies 20584, The World Bank.
    17. Noemi Oggero & Maria Cristina Rossi & Elisa Ughetto, 2019. "Entrepreneurial Spirits in Women and Men. The Role of Financial Literacy and Digital Skills," Working papers 059, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    18. Lührmann, Melanie & Serra-Garcia, Marta & Winter, Joachim, 2015. "Teaching teenagers in finance: Does it work?," Journal of Banking & Finance, Elsevier, vol. 54(C), pages 160-174.
    19. Nicholas Bloom & Renata Lemos & Raffaella Sadun & Daniela Scur & John Van Reenen, 2014. "The New Empirical Economics of Management," NBER Working Papers 20102, National Bureau of Economic Research, Inc.
    20. Xu, Lisa & Zia, Bilal, 2012. "Financial literacy around the world : an overview of the evidence with practical suggestions for the way forward," Policy Research Working Paper Series 6107, The World Bank.
    21. Thorsten Beck & Haki Pamuk & Burak R. Uras, 2017. "Entrepreneurial Saving Practices and Reinvestment: Theory and Evidence," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 1205-1228, November.
    22. Diether Beuermann & Maria Amelina, 2014. "Does Participatory Budgeting Improve Decentralized Public Service Delivery?," IDB Publications (Working Papers) 87095, Inter-American Development Bank.
    23. Jordi Brandts & Christina Rott & Carles Solà, 2015. "Not Just Like Starting Over: Leadership and Revivification of Cooperation in Groups," Working Papers 775, Barcelona Graduate School of Economics.
    24. Grimm, Michael & Paffhausen, Anna Luisa, 2015. "Do interventions targeted at micro-entrepreneurs and small and medium-sized firms create jobs? A systematic review of the evidence for low and middle income countries," Labour Economics, Elsevier, vol. 32(C), pages 67-85.

    More about this item

    Keywords

    Financial Literacy; Access to Finance; Business in Development; Competitiveness and Competition Policy; Business Environment;

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