Complementing Business Training with Access to Finance: Evidence from Smes in Kenya

40 Pages Posted: 12 Apr 2024

See all articles by Anik Ashraf

Anik Ashraf

Ludwig Maximilian University of Munich (LMU)

Elizabeth Lyons

University of California, San Diego (UCSD)

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Abstract

This paper investigates the complementarity between business training and timely access to financial capital for small and medium enterprises (SMEs) in Kenya. All participants in a business support program are offered training. One-third of participants are offered loans immediately after training (Concurrent Loan), one-third are offered loans six weeks after training (Delayed Loan), and the remaining third are offered loans after another four weeks (Control). While a long time lag may reduce knowledge retention and application by SMEs, concurrent access to loans and associated business spending may crowd out the entrepreneurs' attention from improving business practices. We find evidence for the latter. While SMEs in both Control and Delayed Loan groups improve their business practices, SMEs in the Concurrent Loan group who take loans do not improve their practices at all. Moreover, entrepreneurs who take loans spend less time on their businesses and experience declines in business revenue.

Keywords: Business Training, access to finance

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Suggested Citation

Ashraf, Anik and Lyons, Elizabeth, Complementing Business Training with Access to Finance: Evidence from Smes in Kenya. Available at SSRN: https://ssrn.com/abstract=4792847 or http://dx.doi.org/10.2139/ssrn.4792847

Anik Ashraf (Contact Author)

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

Elizabeth Lyons

University of California, San Diego (UCSD) ( email )

9500 Gilman Drive
Mail Code 0502
La Jolla, CA 92093-0112
United States

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