Business Training for Microfinance Clients: How it Matters and for Whom?
Poverty and Economic Policy Research Network Working Paper No. PMMA-2008-11
36 Pages Posted: 23 Nov 2008 Last revised: 4 Jan 2014
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Business Training for Microfinance Clients: How it Matters and for Whom?
Business Training for Microfinance Clients: How It Matters and for Whom?
Date Written: May 15, 2008
Abstract
We measure the impact of a business training program for female microentrepreneur clients of a group banking program in Peru. Using the credit with education model, we assigned clients randomly to either treatment or control groups. Treatment groups received thirty to sixty minute entrepreneurship training sessions during their normal weekly group banking meeting. These lasted between one to two years. Control groups remained as they were before, meeting weekly with the group banking program solely for making loan and savings payments. We find that intention to treat (ITT) led to higher repayment and client retention rates for the microfinance institution, improved business knowledge, and practices. More importantly, average business sales revenues also increase while revenues fluctuations were reduced. In addition, we find significant heterogeneity in the exposure of clients within the treatment group. Treatment on the treated (TOT) estimates, obtained using ITT as instrumental variable, show substantially larger effects.
Keywords: microfinance, business training, adult education
JEL Classification: C93, D12, D13, D21, I21, J24, O12
Suggested Citation: Suggested Citation
Veronica Frisancho
Inter-American Development Bank (IDB) ( email )
1300 New York Avenue NW
Washington, DC 20577
United States
