Keeping it Simple: Financial Literacy and Rules of Thumb
Author: Alejandro Drexler, Antoinette Schoar, Greg Fisher
Topic: Financial literacy
Publisher: American Economic Journal: Applied Economics
Location: United States
Format: Academic paper
Content Type: Research
Publication Date: April 30, 2014
Micro-entrepreneurs often lack the financial literacy required for the complex financial decisions they face. This research study conducts a randomized control trial with a bank in the Dominican Republic to compare the impact of two distinct programs: a standard accounting training versus a simplified, rule-of-thumb training that teaches basic financial methods. The results suggest that reducing the complexity of training programs might improve their effectiveness, especially for less sophisticated clients.
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