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

Martín Valdivia () and Dean Karlan ()

Working Papers from Economic Growth Center, Yale University

Abstract: Can one teach entrepreneurship, or is it a fixed personal characteristic? Most academic and policy discussion on microentrepreneurs in developing countries focuses on their access to credit, and assumes their human capital to be fixed. 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 village banking 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 microfinance institution also had direct benefits through higher repayment and client retention rates. Larger effects found for those that expressed less interest in training in a baseline survey have important implications for implementing similar market-based interventions with a goal of recovering costs.

Keywords: entrepreneurship; microfinance; business training; business skills; adult education (search for similar items in EconPapers)
JEL-codes: C93 D12 D13 D21 I21 J24 O12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cse, nep-dev, nep-edu, nep-ent, nep-fmk and nep-hrm
Date: 2006-07
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Working Paper: Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:egc:wpaper:941

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