Transcript Capital Constraints in Micro‐Enterprises: the Impact of Cash Transfers

Capital Constraints in Micro‐Enterprises:
the Impact of Cash Transfers
Jeremy Shapiro
Princeton University, Busara Center for Behavioral Economics
May 12, 2015
Motivation
1. Capital matters for growth
2. Capital matters more for small firms ?
3. Does capital matter for joint producerconsumer households ?
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Returns to micro enterprises are from cash and
capital transfers are large
 Recipients: Sri Lankan microenterprises (<$1,000
capital)
 Intervention: cash or in-kind grants ($100 – $200)
 Results: ROC of 55%–63% per year1
 Recipients: aspiring entrepreneurs in Uganda, formed
into groups
 Intervention: training and cash grant ($382 per group
member)
 Results: 38% increase in earnings2
 Recipients: Ghanaian microenterprises (no
employees)
 Intervention: cash and in-kind grant ($120)
 Results: 8% - 25% increase in profits3
1 McKenzie et al. (2008)
2 Blattman et al. (2013)
3 Fafchamps et al. (2011)
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Cash transfers to households have exploded in
scale and scope - impacts on productive
outcomes?
Conditional cash transfers 1997 - 2008
CTs reach
~ 1B
people in
the
developing
world
(DfID
2011)
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A particular example: GiveDirectly
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GiveDirectly – details
1. Identification
– Eligibility determined by
general poverty (residence in
mud hut)
– Verified by multiple field
audits and satellite imagery
2. Transfer
– Completed by M Pesa (cell
phone money transfer service)
– Recipients receive ~$1,000 with
90% efficiency
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Results: cash transfers positively impact the
productive activities of “general households”
Control group mean
Treatment effect (<10% sig)
Treatment effect (not sig)
Monetary outcomes
Value of non-land assets (USD)
279
Non-durable expenditure (USD)
36
Total revenue, monthly (USD)
17
0
100
200
300
400
500
600
Non-ag biz revenue, monthly (USD)
700
800
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Livestock revenue, monthly (USD)
3
Farm revenue, monthly (USD)
0
5
10
15
20
25
30
35
40
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Implications
 High returns for small enterprises – lends support to
policies that help small entrepreneurs obtain capital
 Smaller, but significant, productive benefits to general
producer-consumer households (very microenterprises)
- Small impact, big scale: these represent hundreds of millions
of low-income households
- Development (e.g., GDP) effects through productivity
impacts a consideration alongside poverty reduction effects
of broad-based cash transfers
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Thank you.
[email protected]
[email protected]
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