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

Anik Ashraf and Elizabeth Lyons
Additional contact information
Elizabeth Lyons: University of California San Diego

No 416, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: In this paper, we study the complementarity between business training and access to financial capital for small and medium enterprises (SMEs) in Kenya. All participants in a business training program are offered training. One-third of participants are offered loans immediately after training (Concurrent Loan group), one-third are offered loans six weeks after training (Delayed Loan group), and the remaining third are offered loans after another four weeks (Control group). While a long delay between training and loans may reduce knowledge retention and application by SMEs in the presence of complementarity, concurrent access to loans and associated business spending may crowd out the entrepreneurs' attention from improving business practices. We find evidence for the latter in both intention-to-treat and treatment-on-the-treated estimates. 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 their business revenue falls. Our evidence is consistent with the entrepreneurs in our study using loans to substitute for their income.

Keywords: business training; access to finance (search for similar items in EconPapers)
JEL-codes: L26 M53 O12 (search for similar items in EconPapers)
Date: 2023-08-09
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-ent and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://rationality-and-competition.de/wp-content/ ... ussion_paper/416.pdf (application/pdf)

Related works:
Working Paper: Complementing Business Training with Access to Finance: Evidence from SMEs in Kenya (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rco:dpaper:416

Access Statistics for this paper

More papers in Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition
Bibliographic data for series maintained by Viviana Lalli ().