nep-mfd New Economics Papers
on Microfinance
Issue of 2016‒06‒25
one paper chosen by
Olivier Dagnelie
Université de Caen

  1. Changing saving and investment behavior: the impact of financial literacy training and reminders on micro-businesses By Girum Abebe; Biruk Tekle; Yukichi Mano

  1. By: Girum Abebe; Biruk Tekle; Yukichi Mano
    Abstract: In developing countries, savings is an important financial tool, particularly for micro-business with limited access to credit. However, micro-entrepreneurs often undersave, even when they have some surplus and the desire to save maybe because of knowledge gap and behavioral biases. To test the importance of these saving constraints, we offered four-hour financial literacy training and periodic SMS reminders for three months to randomly selected group of micro-entrepreneurs in Addis Ababa, Ethiopia.. While financial literacy training alone seemed ineffective, we find that reminders and joint treatment encouraged better saving behavior. Our results confirm earlier findings that savings can be limited by attention, whereas how entrepreneurs manage savings depends on their levels of financial literacy.
    Keywords: savings; reminders; financial training; entrepreneurs
    JEL: D92 E21 L26
    Date: 2016

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