Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions

Dean Karlan and Martín Valdivia

No 107, Working Papers from Center for Global Development

Abstract: Can one teach basic entrepreneurship skills, or are they fixed personal characteristics? Most academic and development policy discussions about microentrepreneurs focus on their access to credit, and assume their human capital to be fixed. The self-employed poor rarely have any formal training in business skills. However, a growing number of microfinance organizations are attempting to build the human capital of micro-entrepreneurs in order to improve the livelihood of their clients and help further their mission of poverty alleviation. Using a randomized control trial, we measure the marginal impact of adding business training to a Peruvian group lending program for female microentrepreneurs. Treatment groups received thirty to sixty minute entrepreneurship training sessions during their normal weekly or monthly banking meeting over a period of one to two years. Control groups remained as they were before, meeting at the same frequency but solely for making loan and savings payments. We find that the treatment led to improved business knowledge, practices and revenues. The program also improved repayment and client retention rates for the microfinance institution. Larger effects found for those that expressed less interest in training in a baseline survey. This has important implications for implementing similar market-based interventions with a goal of recovering costs.

Keywords: entrepreneurship; microentrepreneur; business skills; business training; credit (search for similar items in EconPapers)
JEL-codes: M0 M13 M40 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2007-01
New Economics Papers: this item is included in nep-acc, nep-dev, nep-ent, nep-hrm, nep-knm and nep-mfd
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Citations: View citations in EconPapers (8)

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http://www.cgdev.org/content/publications/detail/12331

Related works:
Journal Article: Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions (2011)
Working Paper: Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions (2006)
Working Paper: Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions (2006)
Working Paper: Teaching entrepreneurship: Impact of business training on microfinance clients and institutions (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:cgd:wpaper:107

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