IMPROVING FINANCIAL LITERACY AND PARTICIPATION OF FEMALE ENTREPRENEURS IN CHILE

Jeanne Lafortune and Jose Tessada

jlafortune@uc.cl jtessada@uc.cl

Pontificia Universidad Católica de Chile & J-PAL LAC

1

Motivation

2

The existing literature evaluating the impact of financial and management training programs has not been uniformly positive in its conclusions.

Complementing in-class sessions with follow-up visits and technical assistance has significant positive effects in most studies, Cho and Honorati (2012).

Female entrepreneurs seem to benefit from personalized support and follow-up visits after a training program in Peru, Valdivia (2011)

There exists great heterogeneity in the programs offered so it is important to identify how the different components of the programs operate in order to achieve the expected results, Xu and Zia (2012)

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Which elements or teaching methodologies contribute to the

effectiveness of training courses for micro entrepreneurs?

Guide the design of training courses and focalize the resources on the most

effective methods

Experimental Design

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Randomization unit: Role Model: class group level Technical Assistance: individual level

Stratification: Role Model: region and county Technical Assistance: observable characteristics

Data Collection Procedure

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TimelineStarting

point 18-03-2013

Class 4:Base Line 1Participant

characterization

Class 7:Role Models Presentation

Application From: Base Line 0

(analytic abilities and financial knowledge

Technical Assistance(Class 10)

Last class:Follow-up 1

Final ceremony (remaining

surveys applied)

Double Digitation

LB1

Month 0 Month 1 Month 2 Month 3 Month 4 Month 12

Follow-up 2:Phone survey

Compliance Rates

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86% 67% 71% 77%

Results in the short-run

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Visit of a role model significantly increases the attendance of participants to classes

Relatively cheap way of increasing knowledge transmitted to the students!

Role models appear to decrease the purchase of capital goods and the application to seed funds

Change in the way the business is financed and developed.

Receiving personalized technical assistance increases the probability of self-employment and the purchase of a computer

More professional/focused businesses?

Little evidence that this occurred through improved business techniques

Results in the long-run We only have results for 2 cohorts so far, results are preliminary

Income per capita appears to increase in response to personalized technical assistance

Role model also reduces the probability of having a loan rejected

Personalized technical assistance in the business significantly raises sales but also costs leading to no statistically significant impact on profits

Again, little evidence that this occurred through improved business techniques

Remaining questions

9

Are we not measuring techniques adequately?

Or do role models may operate on a different margin than through learning (advice and motivation)?

Individualized technical assistance may motivate development of a sound business plan more than pushing for the implementation of new practices

We hope to learn more through the follow-up 2 with our last 2 cohorts.