Please use this form to submit your study for inclusion into our database. It will be checked by a member of the Innovation Growth Lab team, who may be in contact to ask for more information. Your email address * Your name * Title * The name of the study Short summary A brief description of the project's goals and its current state Abstract <p>Micro-entrepreneurs often lack the financial literacy required to make important financial decisions. We conducted a randomized evaluation with a bank in the Dominican Republic to compare the impact of two distinct programs: standard accounting training versus a simplified, rule-of-thumb training that taught basic financial heuristics. The rule-of-thumb training significantly improved firms' financial practices, objective reporting quality, and revenues. For micro-entrepreneurs with lower skills or poor initial financial practices, the impact of the rule-of-thumb training was significantly larger than that of the standard accounting training, suggesting that simplifying training programs might improve their effectiveness for less sophisticated individuals.</p> The full abstract of the study, if available Links http://doi.org/10.1257/app.6.2.1 Links to any published papers and related discussions Authors * Affiliations Academic and other institutes that the authors of the study are members of Delivery partner Organisations involved in delivering the trial, if appropriate Year Year Year199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023202420252026 Month MonthJanFebMarAprMayJunJulAugSepOctNovDec Day Day12345678910111213141516171819202122232425262728293031 Journal Journal publishing the study, if available Publication stage * Working Paper Published Ongoing Research Forthcoming Discussion Paper Research theme * Entrepreneurship Innovation Business Growth Country Country or countries where this study took place. Topics What sort of topics does the study cover? Sample attributes Hypotheses / research question How does 'rule-of-thumb' financial training compare with more formal approaches? Sample Trial population and sample selection ADOPEM business or personal loan clients who has expressed interest in basic financial and accounting training. Number of treatment groups Size of treatment groups Size of control group Unit of analysis Clustered? Yes No Cluster details Trial attributes Treatment description The intervention compared two approaches to improve financial literacy: standard accounting training and simplified, rule of thumb training employing basic financial heuristics. Rounds of data collection Baseline data collection and method Survey conducted by a professional firm Data collection method and data collected Evaluation Outcome variables <p>Main analysis: Business and financial practice outcomes: Separate business and personal cash; Keep accounting records; Separate business and personal accounting; Set aside cash for business expenses; Calculate revenues formally; Business practices index; Any savings; Savings amount, $RD Reporting quality outcomes: Any reporting errors; Raw profit calc. diff. (RD$), weekly; Absolute value profit calc. diff. (RD$), weekly Business performance outcomes: Total number of employees; Revenue index; Sales, average week; Sales, bad week (RD$) Institutional outcomes: Loan size (RD$); Any savings; Savings last month (RD$); Individual loan; Dropout Heterogeneity analysis: Business practices index; Any reporting errors; Revenue index; Sales, bad week (RD$)</p> <div> </div> Results <p>The rule of thumb training improved firms financial practices, reporting and revenues, with a particularly strong effect on entrepreneurs with lower initial financial skills.</p> Intervention costs Cost benefit ratio Reference Drexler, A., Fischer, G., Schoar, A. (2014). 'Keeping It Simple: Financial Literacy and Rules of Thumb'. American Economic Journal: Applied Economics. Citation for use in academic references
