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Keeping it simple: The results of rule of thumb based financial literacy training on business outcomes and savings. April 6, 2011 World Bank and IFC. How well do financial literacy programs work?. What is the impact of financial literacy training for SMEs in emerging markets?
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Keeping it simple: The results of rule of thumb based financial literacy training on business outcomes and savings April 6, 2011 World Bank and IFC
How well do financial literacy programs work? • What is the impact of financial literacy training for SMEs in emerging markets? • What type of training works better?
Study conducted with clients of ADOPEM in DR • Average loan US$ 800 • Average weekly sales US$200 • Range $110 to $245 • Approximately 50% do not separate business and home accounts • They claim to keep “records” (66%)
Rules-of-Thumb Training • Keep business cash physically separate from personal cash • Pay yourself a salary • Also acts as commitment device to not over-consume • How to estimate business profit using changes in business cash-on-hand • Distinguishing business and personal expenses
Rules of Thumb training improves financial practices All values are deviations from control group Rules of Thumb training improves revenue in bad weeks
Next steps • Replication • More performance data measurement • Scaling up