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Can microenterprises grow through finance? By Nathan Fiala from the German Institute for Economic Research

Can microenterprises grow through finance? By Nathan Fiala from the German Institute for Economic Research

In my job market paper, I look at the relative effect of offering microfinance to both male and female business owners directly. The size of the cash grants and loans is small at $200 (500,000 USH), but common in the standard microfinance model: equal to approximately 1.5 times the monthly profits of the average business. I compare offering finance to cash grants and a control group and interact finance and grants with an ILO business training program, called Start Your Business (SYB), to see if including skills with capital can improve outcomes. I then follow the business owners to determine the effect of these interventions on both business and household outcomes over time.