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Business Education for Microcredit Clients in Peru
Debate exists as to whether various types of training should be integrated into the frequent meetings required of microfinance lending groups, as it poses a unique opportunity to deliver services at a reduced cost. For this study, IPA is working with FINCA-Peru to study the impact of integrating business training into their regular weekly meetings. The study design involves randomly selecting a subset of FINCA-Peru lending groups to receive business training at their regular meetings (treatment group) while the remaining groups continue with group meetings without training (control group). We assess the impact of the training on institutional outcomes (such as dropout rates, repayment rates, loan size and savings), household outcomes (such as consumption and education outcomes) and business outcomes (such as business size and income).
Results
Study implementation began in Summer of 2002 and was completed in 2005. We found the clients in the treatment group improved business knowledge, practices and revenues. The microfinance institution also benefited through higher repayment and a 16% increase in client retention rates. Interestingly, there were larger effects for those that expressed less interest in training at the outset of the program, a finding that could have important implications for implementing similar market-based interventions with a goal of recovering costs. |
Project Overview
Researchers
Dean Karlan, Martin Valdivia
Sectors
Microfinance & Enterprise
Themes
Training
Research Questions
Is it cost-effective for the lending organization to add business training sessions to microcredit lending group meetings? How does business training impact the business and household outcomes of microcredit clients?
Country
Peru
Sample
4500 Clients of FINCA-Peru
Status
Complete |