Principal Investigators: Shawn Cole (HBS), Antoinette Schoar (MIT)
Research Team: Vineeth Patapathi, Pratibha Joshi, John Victor Arun Kumar, Sakshi Mohan, Kanika Joshi
LEAD Centre: Small Enterprise Finance Centre (SEFC)
Focus Area: SME Finance
Project Geography: Karnataka, Madhya Pradesh, Delhi
Partner: Ideas42, IFC, PEDL, Janalakshmi, AwaazDe, EngageSpark
Status: Completed


Micro, small and medium enterprises in developing countries have the potential to improve livelihoods and promote inclusive growth. However, entrepreneurs often lack necessary skills to manage their enterprises effectively, and need to be provided with the right tools and skills to improve financial management of their enterprises. Traditional approaches such as in-person training are expensive and have not had a demonstrated impact on actual financial behaviour and business outcomes. For an entrepreneur who typically juggles multiple roles, the time needed for these trainings (including training hours, transport, etc.) reduces turnout considerably.

To address these barriers, researchers at IFMR LEAD conducted a year-long randomized evaluation to understand whether a low-cost, mobile phone-based program that delivers simplified financial lessons via Interactive Voice Response technology could improve financial management behavior and business outcomes for microentrepreneurs in India.

Study Design

This evaluation was carried out in two cities in India: Bangalore in the state of Karnataka, and Indore in the state of Madhya Pradesh. The intervention targeted microentrepreneurs in urban and peri-urban areas of these two cities who had outstanding individual business loans with the microfinance institution Janalakshmi. The microentrepreneurs in this study had taken a loan ranging from INR 50,000-200,000 (US$800-3,200). Their businesses included provisions and textile shops, fruit and vegetable stalls, tailoring services, micro-manufacturing, and trading.

Key Findings

It was found that listening to IVR messages via mobile phone improved key financial management practices by two to eight percentage points among training participants, compared to the control group that received no training. Participants were highly engaged with the messages – on average, 76% of clients picked up the training calls and listened to at least 70% of the message. Furthermore, delivering the Financial Heuristics via mobile phone was cheaper – it cost about 67% less than the institution’s in-person financial education training.

Related Links
Financial Heuristics Training
Rules of Thumb: Providing Timely Useful Financial Management Advice at Scale in India