In Simple Words
Imagine telling a friend that if you get $100, you will buy a specific power drill for your workshop. When given the $100, you immediately go out and buy that exact drill. However, over the next year, you do not buy any additional tools, and the drill eventually sits unused because your overall customer orders haven't grown. Unconditional grants successfully fund targeted baseline purchase intentions in the short run, but fail to trigger sustained long-term capital accumulation.
Tailors with small businesses
- Neither grant nor consulting
- Group used for comparison
- Grant alone
- 179 cedis more invested in intended purchases
About two months after grants in Ghana; estimate marginally significant. No clear intended-investment advantage remained at final follow-up.
See source →Research question
Evaluating whether cash transfers to liquidity-constrained firms translate into intended asset purchases requires distinguishing between targeted baseline goals and aggregate capital expenditure noise.
Participants
160 urban microenterprise tailors in Accra, Ghana.
Study Design
Longitudinal tracking comparing self-reported baseline investment intentions against actual category investment flows (machines, property, inputs) at Round 3 (2 months post-grant) and Round 8 (14 months post-grant).
Results
Capital grant recipients invested 179.3 cedis more than control firms in their baseline-specified category at Round 3 (p < 0.10), but by Round 8, total investment flows turned negative (-378.3 cedis, p < 0.10), showing no persistent asset accumulation.
Takeaway
Measure baseline specific investment intentions separately from aggregate asset flows to capture short-run liquidity relaxation without assuming long-term capital growth.
Source and citation
See source →Read alongside the research
Plain-English glossary
Original explanations, informed by the references below. Examples are illustrations, not data from the studies above. The research text stays unchanged.
- Longitudinal study
A study that checks the same group of people at different times. This lets researchers examine how things change over time.
ExampleResearchers ask the same workers about their wellbeing at the start, after three months and after six months.
NICE · Longitudinal study ↗Read more about longitudinal study →- Baseline
The starting measurements in a study. Researchers use these to compare what participants were like at the start with what happens later.
ExampleBefore a training programme starts, researchers measure workers’ earnings. That first measurement is the baseline.
GET-IT glossary · Baseline characteristics ↗Read more about baseline →