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Money or Management? A Field Experiment on Constraints to Entrepreneurship in Rural Pakistan

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  • Xavier Giné
  • Ghazala Mansuri

Abstract

This paper identifies the relative importance of human and physical capital for entrepreneurship. Microfinance clients were offered business training and a loan lottery of up to seven times the average loan size. Business training increased business knowledge, reduced business failure, improved business practices, and increased household expenditures by US$82 per year. It also improved financial and labor allocation decisions. These effects are concentrated among male clients, however. Access to larger loans, in contrast, had little effect, perhaps because current loan sizes already meet the demand of most clients. Despite these positive impacts, business training was not cost-effective for the lender.

Suggested Citation

  • Xavier Giné & Ghazala Mansuri, 2021. "Money or Management? A Field Experiment on Constraints to Entrepreneurship in Rural Pakistan," Economic Development and Cultural Change, University of Chicago Press, vol. 70(1), pages 41-86.
    • Handle: RePEc:ucp:ecdecc:doi:10.1086/707502
    DOI: 10.1086/707502
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    Cited by:

    1. Dammert, Ana C. & Nansamba, Aisha, 2023. "Skills training and business outcomes: Experimental evidence from Liberia," World Development, Elsevier, vol. 162(C).
    2. Lang, M & Seither, J, 2022. "The Economics of Women s Entrepreneurship: Evidence from Building Skills in Uganda," Documentos de Trabajo 20563, Universidad del Rosario.
    3. Lahiri, Bidisha & Daramola, Richard, 2023. "Effects of credit and labor constraints on microenterprises and the unintended impact of changes in household endowments: Use of threshold estimation to detect heterogeneity," The Quarterly Review of Economics and Finance, Elsevier, vol. 88(C), pages 21-38.

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