Finance and Enterprise Growth in Developing Countries: Evidence From An Experiment in Uganda

Nathan Fiala

No 290086, Working Paper series from University of Connecticut, Charles J. Zwick Center for Food and Resource Policy

Abstract: Microenterprises are a major contributor to income and employment in developing countries. There is growing evidence though that they do not expand beyond their intitial start-up point. I present the results of a randomized experiment with microenterprise owners in Uganda designed to explore the constraints to this growth. Business owners were randomly selected to receive loans, cash grants, business skills training, or a combination of these programs. I find that men with access to loans and training report significantly higher profits. The loan-only intervention had some initial impact, but this does not last. There are no impacts from the grant intervention, and no effects for women from any of the interventions. While recent research has found little effect from microfinance, I argue this is because men are not included in the studies. The results from this experiment suggest that male owned businesses can expand from microfinance.

Keywords: Financial Economics; International Development (search for similar items in EconPapers)
Pages: 86
Date: 2014-05-26
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ucozwp:290086

DOI: 10.22004/ag.econ.290086

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