Entrepreneurship


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.

  • Subsidizing Vocational Training for Disadvantaged Youth in Colombia: Evidence from a Randomized Trial

    Attanasio et al (2011)

    Original abstract:

    This paper evaluates the impact of a randomized training program for disadvantaged youth introduced in Colombia in 2005. This randomized trial offers a unique opportunity to examine the impact of training in a middle income country. We use originally collected data on individuals randomly offered and not offered training. The program raises earnings and employment for women. Women offered training earn 19.6 percent more and have a 0.068 higher probability of paid employment than those not offered training, mainly in formal-sector jobs. Cost-benefit analysis of these results suggests that the program generates much larger net gains than those found in developed countries. (JEL I28, J13, J24, O15)

    Intervention settings: Rural.

    Intervention description: One treatment group was offered a group lending product, while the other was offered an individual lending product. Randomization was done at the village level.

    Methodology: RCT.

    Sample: 4,353 individuals.

    Findings: Significant increase in business ownership (10%), food consumption (17%) and asset ownership among those offered a group lending product.No effect among those offered an individual lending product. No significant effect on household income. No difference in repayment rates between the two treatment groups.

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  • Challenges in Banking the Rural Poor: Evidence from Kenya's Western Province

    Dupas and Robinson (2012)

    Original abstract:

    Most people in rural Africa do not have bank accounts. In this paper, we combine experimental and survey evidence from Western Kenya to document some of the supply and demand factors behind such low levels of financial inclusion. Our experiment had two parts. In the first part, we waived the fixed cost of opening a basic savings account at a local bank for a random subset of individuals who were initially unbanked. While 63% of people opened an account, only 18% actively used it. Survey evidence suggests that the main reasons people did not begin saving in their bank accounts are that: (1) they do not trust the bank, (2) service is unreliable, and (3) withdrawal fees are prohibitively expensive. In the second part of the experiment, we provided information on local credit options and lowered the eligibility requirements for an initial small loan. Within the following 6 months, only 3% of people initiated the loan application process. Survey evidence suggests that people do not borrow because they do not want to risk losing their collateral. These results suggest that, while simply expanding access to banking services (for instance by lowering account opening fees) will benefit a minority, broader success may be unobtainable unless the quality of services is simultaneously improved. There are also challenges on the demand side, however. More work needs to be done to understand what savings and credit products are best suited for the majority of rural households.

    Intervention settings: Rural.

    Intervention description: Provided safe place (metal box) to save money with randomly varying levels of commitment to save.

    Methodology: RCT.

    Sample: 771 Members of 113 rotating savings clubs (ROSCAs) in one administrative division of western Kenya.

    Findings: Preventive health investments increased by 68%. The share of households achieving their savings goals increased by 13% (compared to 34% in the control group). Three years later 39% of those who received metal boxes were still using them for saving. Larger effects found among married than among unmarried females. The results also suggest that savings programs that do not restrict liquidity are most effective.

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  • Failure vs. Displacement: Why an Innovative Anti-Poverty Program Showed No Net Impact

    Morduch et al (2012)

    Original abstract:

    We present results from a randomized trial of an innovative anti-poverty program in India. Instead of a safety net, the program provides "ultra-poor" households with inputs to create a new livelihood and attain economic independence. We find no statistically significant evidence of lasting net impact on consumption, income or asset accumulation. The main impact was the re-optimization of time use: sharp gains in income from the new livelihood were fully offset by lower earnings from wage labor. The result highlights how the existence of alternative economic options shapes net impacts and external validity.

    Intervention settings: Rural.

    Intervention description: Livestock asset ($140). Asset specific training.

    Methodology:

    Sample: Women.

    Findings: 325% more time spent tending to animals relative to baseline wage labor: 22%. No impact on earnings. No impact on per capita expenditure. Less time in wage labor (1 hours per day).

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  • Group Lending or Individual Lending? Evidence from a Randomized Field Experiment in Mongolia

    Attanasio et al (2011)

    Original abstract:

    Although microfinance institutions across the world are moving from group lending towards individual lending, this strategic shift is not substantiated by sufficient empirical evidence on the impact of both types of lending on borrowers. We present such evidence from a randomised field experiment in rural Mongolia. We find a positive impact of access to group loans on food consumption and entrepreneurship. Among households that were offered group loans the likelihood of owning an enterprise increases by 10 per cent more than in control villages. Enterprise profits increase over time as well, particularly for the less educated. For individual lending on the other hand, we detect no significant increase in consumption or enterprise ownership. These results are in line with theories that stress the disciplining effect of group lending: joint liability may deter borrowers from using loans for non-investment purposes. Our results on informal transfers are consistent with this hypothesis. Borrowers in group-lending villages are less likely to make informal transfers to families and friends while borrowers in individual-lending villages are more likely to do so. We find no significant difference in repayment rates between the two lending programmes, neither of which entailed weekly repayment meetings.

    Intervention settings: Rural.

    Intervention description: Tested opening of MFI branches by assigning group liability loans, Individual loans or having no MFI branch. Group liability and individual credit originally intended for business purposes.

    Methodology: RCT.

    Sample: 1,148 adult women (987 in follow-up) from 40 communities.

    Findings: 11% statistically insignificant increase in total per capita expenditures. Positive impact of both group and individual loans on business profits among women clients in areas with access to credit for longer period of time. Positive impact on likelihood of owning enterprise among HH offered a group loan. Group liability loans had positive impact on HH business creation (no impact of individual credit). Credit had positive impact on women's profits in areas with access to credit for longer period of time. No significant impact on self-employment, wage labor or total earnings. No impact on likelihood of owning enterprise among HH offered individual loans or group liability credit on individual credit.

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  • When is Capital Enough to Get Microenterprises Growing? Evidence from a Randomized Experiment in Ghana

    Fafchamps et al (2010)

    Original abstract:

    Standard models of investment predict that credit-constrained firms should grow rapidly when given additional capital, and that how this capital is provided should not affect decisions to invest in the business or consume the capital. We randomly gave cash and in-kind grants to male- and female-owned microenterprises in urban Ghana. Our findings cast doubt on the ability of capital alone to stimulate the growth of female microenterprises. First, while the average treatment effects of the in-kind grants are large and positive for both males and females, the gain in profits is almost zero for women with initial profits below the median, suggesting that capital alone is not enough to grow subsistence enterprises owned by women. Second, for women we strongly reject equality of the cash and in-kind grants; only in-kind grants lead to growth in business profits. The results for men also suggest a lower impact of cash, but differences between cash and in-kind grants are less robust. The difference in the effects of cash and in-kind grants is associated more with a lack of self-control than with external pressure. As a result, the manner in which funding is provided affects microenterprise growth.

    Intervention settings: Urban.

    Intervention description: Capital grants in cash or in-kind ($120) as proxy to credit.

    Methodology: RCT.

    Sample: Entrepreneurs (more than half of sample).

    Findings: Both cash and in-kind grants had positive impact on men's businesses. In-kind grants led to higher profits only for women with initially larger, higher-profit businesses. No significant impact on per capita expenditure. No overall impact of grants on women's business investment or income; heterogeneous impact that depends on initial business size and profitability, and type of capital injection (in-kind have positive impact on more successful firms). Cash grants have no impact on women's businesses; tend to be used for HH expenses. No impact of grants on profits of women with initially below average profit businesses.

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