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Changing saving and investment behavior: the impact of financial literacy training and reminders on micro-businesses

Girum Abebe (), Biruk Tekle and Yukichi Mano ()
Authors registered in the RePEc Author Service: Biruk Tekle Gebreyohannes

No HIAS-E-15, Discussion paper series from Hitotsubashi Institute for Advanced Study, Hitotsubashi University

Abstract: In developing countries, savings is an important financial tool, particularly for micro-business with limited access to credit. However, micro-entrepreneurs often undersave, even when they have some surplus and the desire to save may be because of a knowledge gap and behavioral biases. We employed an experimental approach relaxing these savings constraints to explore the effects of providing financial literacy training and reminders to micro-entrepreneurs in Ethiopia. While financial literacy training alone seemed ineffective, the reminders significantly increased the savings-to-sales ratio by 54.5%, the percentage of business proceeds reinvested back to business by 91.0 %, and the percentage of savings goal achieved by 116%. Joint treatment significantly increased the percentage of savings goal achieved by 66.5% and deposit in an ordinary bank account by 84%. Our results confirm earlier findings that savings can be limited by attention, whereas how entrepreneurs manage savings depends on their levels of financial literacy [151 words].

Keywords: savings; reminders; financial training; entrepreneurs (search for similar items in EconPapers)
JEL-codes: D92 E21 L26 (search for similar items in EconPapers)
Date: 2015-12-08
New Economics Papers: this item is included in nep-ent, nep-mac and nep-mfd
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https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/27615/070_hiasDP-E-15.pdf

Related works:
Journal Article: Changing Saving and Investment Behaviour: The Impact of Financial Literacy Training and Reminders on Micro-businesses (2018) Downloads
Working Paper: Changing saving and investment behavior: the impact of financial literacy training and reminders on micro-businesses (2016) Downloads
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