The Impact of Financial Education of Executives on Financial Practices of Medium and Large Enterprises

83 Pages Posted: 18 Sep 2019 Last revised: 20 Jul 2021

See all articles by Claudia Custodio

Claudia Custodio

Imperial College London; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Diogo Mendes

Stockholm School of Economics; Swedish House of Finance

Daniel Metzger

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM); European Corporate Governance Institute (ECGI); London School of Economics & Political Science (LSE) - Financial Markets Group

Multiple version iconThere are 2 versions of this paper

Date Written: July 20, 2021

Abstract

This paper studies the impact of a course in finance for executives of medium and large enterprises on firm policies and performance through a randomized controlled trial (RCT) in Mozambique. Survey data and accounting data provide consistent evidence that managers change firm financial policies in response to finance education. Reductions in working capital generate an increase in cash flows used to finance long-term investments. Those changes improve the performance of the treated firms. Overall, our results suggest that relatively small and low-cost interventions can help firms to mitigate financial constraints and potentially affect economic development.

Keywords: Financial Literacy, Financial Education, RCT, Financing Constraints, CEOs

JEL Classification: D4, G30, J24, L25, M41, O16

Suggested Citation

Custodio, Claudia and Mendes, Diogo and Metzger, Daniel, The Impact of Financial Education of Executives on Financial Practices of Medium and Large Enterprises (July 20, 2021). Swedish House of Finance Research Paper No. 20-29, Available at SSRN: https://ssrn.com/abstract=3450851 or http://dx.doi.org/10.2139/ssrn.3450851

Claudia Custodio

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Diogo Mendes

Stockholm School of Economics ( email )

PO Box 6501
Stockholm, 11383
Sweden

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

Daniel Metzger (Contact Author)

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

London School of Economics & Political Science (LSE) - Financial Markets Group ( email )

Houghton Street
London WC2A 2AE
United Kingdom

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