Money management and entrepreneurial training in microfinance: impact on beneficiaries and institutions

Lucia Dalla Pellegrina,Giorgio Di Maio,Emanuele Rusinà,Paolo Landoni

doi:10.1007/s40888-021-00217-9

Abstract

This study uses a randomized control trial to evaluate the outcome of integrating money management and entrepreneurial training into a microcredit program in India. We find positive and significant effects on clients’ financial management skills and entrepreneurship abilities, particularly for clients with higher human capital, or more diligent, or having an entrepreneurial idea, and an increase in initiative and self-confidence. Effects appear stronger for clients obliged to attend the training course or more interested in attending it. By considering missed or delayed repayments reduction we assess the benefits of the training provided and of extending it for the institution.

Highlights

Microcredit has gained significant importance in recent years as a mainstream development policy tool (e.g. Aagaard 2011; Guinnane 2011; Yunus 2004)
The general purpose of this study is to evaluate the impact of an entrepreneurial and money management training program conducted at the Institute for Indian Mother and Child (IIMC), a non-governmental development organization offering microfinance services in an extremely poor context
The primary objective of this study was to test the effectiveness of money management and entrepreneurial training course on the beneficiaries of a microcredit program

Summary

Introduction

Microcredit has gained significant importance in recent years as a mainstream development policy tool (e.g. Aagaard 2011; Guinnane 2011; Yunus 2004). As a strategy to support the microcredit sector, several microfinance institutions (MFIs) offer a wide range of services, such as savings collection, microinsurance, and remittances (Armendáriz de Aghion and Morduch 2005; Churchill 2002; Hartarska and Parmeter 2009; Mata 2006). Business development services (BDS), such as financial literacy programs aimed at improving the entrepreneurial skills of microcredit beneficiaries, are sometimes offered jointly with lending (Mortensen et al 2005). The general purpose of this study is to evaluate the impact of an entrepreneurial and money management training program conducted at the Institute for Indian Mother and Child (IIMC), a non-governmental development organization offering microfinance services in an extremely poor context.

Objectives

Results

Conclusion