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Keeping it simple: financial literacy and rules of thumb

Drexler, Alejandro, Fischer, Gregory and Schoar, Antoinette (2010) Keeping it simple: financial literacy and rules of thumb. Development economics , 7994. CERP, London, UK.

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Abstract

Individuals and business owners engage in an increasingly complex array of financial decisions that are critical for their success and well-being. Yet a growing literature documents that in both developed and developing countries, a large fraction of the population is unprepared to make these decisions. Evidence on potential remedies is limited and mixed. Two randomized trials test the impact of financial training on firm-level and individual outcomes for microentrepreneurs in the Dominican Republic. We find no significant effect from a standard, fundamentals-based accounting training. However, a simplified, rule-of-thumb training produced significant and economically meaningful improvements in business practices and outcomes.

Item Type: Monograph (Discussion Paper)
Official URL: http://www.cepr.org/default_static.htm
Additional Information: © 2010 The Authors
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
Journal of Economic Literature Classification System: D - Microeconomics > D1 - Household Behavior and Family Economics > D14 - Personal Finance
D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior
I - Health, Education, and Welfare > I2 - Education > I21 - Analysis of Education
J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J24 - Human Capital; Skills; Occupational Choice; Labor Productivity
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development
Sets: Departments > Economics
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 7994
Date Deposited: 22 Mar 2011 16:10
URL: http://eprints.lse.ac.uk/33502/

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