The Impact of Financial Education of Managers on Medium and Large Enterprises – A Randomized Controlled Trial in Mozambique

Abstract

This paper studies the impact of a financial education program for top managers of medium and large enterprises in Mozambique through a randomized controlled trial (RCT). We use survey data and financial reporting data to show consistent evidence that managers adjust some financial policies in response to the education program. The largest treatment effects are on short-term financial policies related to working capital, generating a positive impact on cash flows due to reductions in account receivables and inventories. There is also a smaller but significant, positive impact on long-term investment. These firm policy changes improve the firm performance of the treated firms. Overall, our results suggest that relatively small and low-cost interventions, such as a short executive education program in finance, improve financial practices and can affect economic development.

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

JEL Classification: D4, G21, J24, L25, M41, O16