| 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. |