Center for Effective Global Action

Much recent research has sought ways to raise the impact of microcredit in low- and middle-income countries (LMICs). One set of interventions has addressed hard skills, often aimed at promoting business skills and financial literacy among microentrepreneurs. Another set of interventions has addressed socio-emotional skills such as the development of self-efficacy, entrepreneurial confidence, and aspirations. We present results from three small randomized controlled trials in India, Peru, and Uganda, each with four treatment arms in which we randomized a mobile-phone-based app designed to teach financial literacy, a video documentary intervention designed to boost entrepreneurial aspirations and goal-setting, the combination of these two interventions, and a control group. Results show positive and significant effects from both interventions, where the financial literacy app increased overall financial literacy by approximately 0.28σ both as a solo intervention and when combined with the aspirations intervention. The aspirations intervention increased an overall aspirational hope index by 0.33σ and by 0.30σ when combined with the financial literacy intervention. Increases in aspirational hope among microentrepreneurs were driven by statistically significant increases in aspirations, agency, and clearer visualizations of pathways out of poverty. Future research seeks to scale up this combined intervention.