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Keeping It Simple: Financial Literacy and Rules of Thumb
- Source :
- MIT web domain
- Publication Year :
- 2014
- Publisher :
- American Economic Association, 2014.
-
Abstract
- Micro-entrepreneurs often lack the financial literacy required to make important financial decisions. We conducted a randomized evaluation with a bank in the Dominican Republic to compare the impact of two distinct programs: standard accounting training versus a simplified, rule-of-thumb training that taught basic financial heuristics. The rule-of-thumb training significantly improved firms' financial practices, objective reporting quality, and revenues. For micro-entrepreneurs with lower skills or poor initial financial practices, the impact of the rule-of-thumb training was significantly larger than that of the standard accounting training, suggesting that simplifying training programs might improve their effectiveness for less sophisticated individuals.<br />International Finance Corporation<br />Ideas42
- Subjects :
- Entrepreneurship
HG Finance
media_common.quotation_subject
HC Economic History and Conditions
jel:D21
jel:I21
jel:D04
Training (civil)
jel:G21
jel:J24
financial literacy
Adult education
jel:M41
jel:L26
jel:L24
Economics
jel:L25
Revenue
Quality (business)
media_common
jel:C93
adult education
business training
entrepreneurship
Actuarial science
jel:D14
Rule of thumb
jel:O12
Financial literacy
jel:O16
Heuristics
randomised controlled trial
General Economics, Econometrics and Finance
Subjects
Details
- Language :
- English
- Database :
- OpenAIRE
- Journal :
- MIT web domain
- Accession number :
- edsair.doi.dedup.....8e7b23e142dfc23f66d6bf2b1eefcf6b