Tag
microenterprises
4 findings
Firms & operationsEntrepreneurial Experimentation HypothesisInitial adoption of business practices increased management scores by 5.65 percentage points at 6 months (p < 0.01) and capital grants increased short-run investments by 179 cedis (p < 0.10). However, treatments led to non-positive or negative income shifts (capital treatment reduced stated income by 45.43 cedis, p < 0.05), causing microentrepreneurs to abandon new business practices and revert back to baseline scale within 1 to 2 years.RCTFinance & microfinanceSize-Dependent Credit Constraints and High Marginal Returns to Capital$100-$200 cash grants to Sri Lankan microenterprises yielded a 5 percent monthly real return on capital; directed credit expansion to Indian medium-sized firms generated an annual return on loans close to 90 percent.RCTFinance & microfinanceMicroenterprise High Marginal Returns to CapitalGrants of $100–$200 to Sri Lankan microenterprises increased capital stock and generated an implied real return to capital of 5 percent per month (60 percent annually); directed lending to Indian medium-sized firms yielded an annual return on capital close to 90 percent.RCTFinance & microfinanceInformal Credit Market ExclusionAt baseline, 82.5% of the 160 microentrepreneurs had never accessed formal credit markets. Over the entire two-year study period, all 160 tailors combined took a total of only 13 informal loans from non-bank sources, demonstrating near-zero reliance on informal debt markets.Observational Study