Micro-entrepreneurship Debt Level and Access to Credit: Short-Term Impacts of a Financial Literacy Program

Abstract

Using a randomized control trial, we evaluated the effect of a financial literacy program on the level of debt and on formal access to credit in Chile. We use a sample of beneficiaries of a publicly run micro-entrepreneurship program. We evaluated the program using administrative data with information on the debt level, interest rates, and new loans provided by the formal sector. The program tends to decreased debt level in the short run while increasing the probability of having formal debt. The program had effects in parts of the country where the take-up was higher and the implementation was smoother.

À l’aide d’un essai contrôlé aléatoire, nous avons évalué l’effet d’un programme d’éducation financière sur le niveau de la dette et sur l’accès formel au crédit au Chili. Nous avons utilisé un échantillon de bénéficiaires d’un programme de micro-entreprenariat public. De plus, nous avons évalué le programme en utilisant des données administratives, comprenant des informations sur le montant de la dette, les taux d’intérêt et les nouveaux prêts accordés par le secteur formel. Le programme a tendance à faire diminuer le niveau de la dette à court terme, tout en augmentant la probabilité d’avoir une dette formelle. Il a eu des effets dans les parties du pays où son adoption était plus élevée et la mise en œuvre était plus facile.

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Acknowledgement

We thank Maria Ignacia Contreras, Rafael Carranza, Alicia Ugarte, Daniela Paz, and Cristián Jara for their research assistance. We thank the FOSIS and particularly Ghia Gajardo. This research was made possible by the financial support from FOSIS, Fondecyt No. 1140914, Instituto de Estudios Peruanos and IDRC.

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Correspondence to Esteban Puentes.

Appendix

Appendix

Table A1 ITT effects on main outcomes (3 months after the program ended)
Table A2 ITT effects on main outcomes (3 months after the program ended)

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Martínez A., C., Puentes, E. Micro-entrepreneurship Debt Level and Access to Credit: Short-Term Impacts of a Financial Literacy Program. Eur J Dev Res 30, 613–629 (2018). https://doi.org/10.1057/s41287-017-0085-4

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Keywords

  • financial literacy
  • debt
  • randomized evaluation
  • micro entrepreneurship
  • formal loanss