Original abstracts from the papers in the database are provided below. All abstracts are drawn directly from the papers referenced. Links to access the papers are provided, although
the papers may also be available from other web sources. By providing links to other sites, the United Nations Foundation and ExxonMobil Foundation do not guarantee, approve, or endorse the information or products available on these sites.

  • The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico

    Bruhn, Karlan, and Schoar (2012)

    Original abstract:

    We test whether managerial human capital has a first order effect on the performance and growth of small enterprises in emerging markets. In a randomized control trial in Puebla, Mexico, we randomly assigned 150 out of 432 small and medium size enterprises to receive subsidized consulting services, while the remaining 267 enterprises served as a control group that did not receive any subsidized training. Treatment enterprises were matched with one of nine local consulting firms and met with their consultants once a week for four hours over a one year period. Results from a follow_up survey, conducted after the intervention, show that the consulting services had a large impact on the performance of the enterprises in the treatment group: monthly sales went up by about 80 percent; similarly, profits and productivity increased by 120 percent compared to the control group. We also see a significant increase in the entrepreneurial spirit index for the treatment group, a set of questions designed to illicit the SME owners' confidence in their ability to manage their business and deal with any future difficulties. However, we do not find any significant increase in the number of workers employed in the treatment group.

    Intervention settings: Urban.

    Intervention description: Consulting services.

    Methodology: RCT.

    Sample: 432 small and medium enterprises (30% women decision-makers) with average of 14 full-time employees. Firms existed on average 10 years.

    Findings: Increase in monthly sales by 80%. Profits and productivity increase by 120%. Significant increase in entrepreneurial spirit index (confidence in ability to manage business and deal with future difficulties). No signficant increase in number of workers employed.

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  • Group Versus Individual Liability: Short and Long-term Evidence from Philippine Microcredit Lending Groups

    Gine and Karlan (2011)

    Original abstract:

    Group liability in microcredit purports to improve repayment rates through peer screening, monitoring, and enforcement. However, it may create excessive pressure, and discourage reliable clients from borrowing. Two randomized trials tested the overall effect, as well as specific mechanisms. The first removed group liability from pre-existing groups and the second randomly assigned villages to either group or individual liability loans. In both, groups still held weekly meetings. We find no increase in short-run or long-run default and larger groups after three years in pre-existing areas, and no change in default but fewer groups created after two years in the expansion areas.

    Intervention settings: Rural.

    Intervention description: Compares impact of individual and group liability credit, and group and individual savings models. Group (group solidarity) and individual-liability credit for business expansion provided by a rural bank. Mandatory savings for group liability loans; voluntary individual savings accounts. Initial loan $18 to $90.

    Methodology: RCT.

    Sample: 100% female microcredit and savings clients.

    Findings: Conversion from group to individual liability did not negatively affect loan repayment rates. Individual loans (with no savings requirement) resulted in lower voluntary savings levels. Individual liability loans attracted more new clients.

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  • Remembering to Pay? Reminders vs. Financial Incentives for Loan Payments

    Cadena, Ximena and Antoinette Schoar (2011)

    Original abstract:

    We report the results from a field experiment with a micro lender in Uganda to test the effectiveness of privately implemented incentives for loan repayment. Using a randomized control trial we measure the impact of three different treatments: Borrowers are either given a lump sum cash reward upon completion of the loan (equivalent to a 25% interest rate reduction on the current loan), a 25% reduction of the interest rate in the next loan the borrower takes from the bank, or a monthly text message reminder before the loan payment is due (SMS). We find that on average the size of the treatment effect is similar across all the treatment groups: borrowers in the treatment groups have a 7-9% increase in the probability of paying on time and the average days late drop by 2 days a month. The results suggest that simple text messages which help borrowers to better manage their repayment dates have similar effects as large changes in the cost of capital of 25% of interest. The impact of the cash back incentives are stronger for customers with smaller loans and less banking experience, the reduced future interest rate seemed to be most effective for customers with larger loans, while the SMS text messages were particularly effective for younger customers.

    Intervention settings:

    Intervention description: Text message reminders to save. Messages were delivered three days prior to the repayment deadline and the messages were in the language of choice by the client (either in English, Luganda or in symbols).

    Methodology: RCT.

    Sample: Individual loan customers who provided collateral worth 80% of the size of the loan. 35% of sample female.

    Findings: The text message strategy increased the probability of perfect repayment by 9 points on average. This impact was statistically significant and larger in magnitude than either of the other incentive schemes. The impact of the cash back incentives are stronger for customers with smaller loans and less banking experience. The reduced future interest rate seemed to be most effective for customers with larger loans. The SMS text messages were particularly effective for younger customers.

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  • Stimulating Managerial Capital in Emerging Markets: The Impact of Business and Financial Literacy for Young Entrepreneurs

    Bruhn and Zia (2013)

    Original 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.

    Intervention settings: Urban

    Intervention description: Business training with central theme of encouraging capital investment among young businesses. Six modules on basic business concepts, accounting skills, and business investment and growth strategies.

    Methodology: RCT

    Sample: 445 young entrepreneurs or potentials (35% women), larger than micro stratified by baseline financial literacy level, gender, industry and baseline products. One-third of sample did not own a business but had a business exploration loan.

    Findings: Program significantly improved business practices (treatment 17% more likely to implement new production processes), investments (treatment 11% more likely to inject new investment into businesses) and loan terms for surviving businesses. Entrepreneurs with higher ex-ante financial literacy exhibited some improvements in business performance and sales (sub-group showed 54% increase in profits). The training program did not influence business survival or business entry by clients with exploratory loans.

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  • A Psychological Personal Initiative Training Enhances Business Success of African Business Owners

    Glaub, Frese, Fischer, and Hoppe (2012)

    Intervention settings: Rural

    Intervention description: Three-day course focused on personal intitiative through a psychological intervention aimed at making business owners more likely to self-start new ideas on products and processes, be more proactive in preparing future opportunities and problems, and be persistent in overcoming barriers.

    Methodology: RCT

    Sample: 109 male and female business owners.

    Findings: 57.4% increase in revenues using difference in difference calculation. Study reports difference in log sales is signficant at 1% level.

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