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http://ssrn.com/abstract=920487
 
 

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Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions


Dean S. Karlan


Yale University; Innovations for Poverty Action; Massachusetts Institute of Technology (MIT) - Abdul Latif Jameel Poverty Action Lab; National Bureau of Economic Research (NBER)

Martin Valdivia


Grupo de Analisis para el Desarrollo (GRADE)

July 2006

Yale University Economic Growth Center Discussion Paper No. 941
Center for Global Development Working Paper No. 108

Abstract:     
Can one teach entrepreneurship, or is it a fixed personal characteristic? Most academic and policy discussion on microentrepreneurs in developing countries focuses on their access to credit, and assumes their human capital to be fixed. However, a growing number of microfinance organizations are attempting to build the human capital of micro-entrepreneurs in order to improve the livelihood of their clients and help further their mission of poverty alleviation. Using a randomized control trial, we measure the marginal impact of adding business training to a Peruvian village banking program for female microentrepreneurs. Treatment groups received thirty to sixty minute entrepreneurship training sessions during their normal weekly or monthly banking meeting over a period of one to two years. Control groups remained as they were before, meeting at the same frequency but solely for making loan and savings payments. We find that the treatment led to improved business knowledge, practices and revenues. The microfinance institution also had direct benefits through higher repayment and client retention rates. Larger effects found for those that expressed less interest in training in a baseline survey have important implications for implementing similar market-based interventions with a goal of recovering costs.

Number of Pages in PDF File: 46

Keywords: entrepreneurship, microfinance, business training, business skills, adult education

JEL Classification: C93, D12, D13, D21, I21, J24, O12

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Date posted: July 25, 2006  

Suggested Citation

Karlan, Dean S. and Valdivia, Martin, Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions (July 2006). Yale University Economic Growth Center Discussion Paper No. 941; Center for Global Development Working Paper No. 108. Available at SSRN: http://ssrn.com/abstract=920487

Contact Information

Dean S. Karlan (Contact Author)
Yale University ( email )
Box 208269
New Haven, CT 06520-8269
United States
Innovations for Poverty Action ( email )
New Haven, CT
United States
Massachusetts Institute of Technology (MIT) - Abdul Latif Jameel Poverty Action Lab ( email )
E60-246
77 Massachusetts Avenue
Cambridge, MA 02139
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Martin Valdivia
Grupo de Analisis para el Desarrollo (GRADE) ( email )
Av, Graú 915
Barranco, Lima
Peru
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