Keeping it Simple: Financial Literacy and Rules of Thumb
39 Pages Posted: 14 Nov 2010
Date Written: September 2010
Individuals and business owners engage in an increasingly complex array of financial decisions that are critical for their success and well-being. Yet a growing literature documents that in both developed and developing countries, a large fraction of the population is unprepared to make these decisions. Evidence on potential remedies is limited and mixed. Two randomized trials test the impact of financial training on firm-level and individual outcomes for microentrepreneurs in the Dominican Republic. We find no significant effect from a standard, fundamentals-based accounting training. However, a simplified, rule-of-thumb training produced significant and economically meaningful improvements in business practices and outcomes.
Keywords: adult education, business training, entrepreneurship, financial literacy
JEL Classification: C93, D14, D21, I21, J24, O12
Suggested Citation: Suggested Citation