Small firms' financial decisions under social factors and information complexity: does financial literacy play a role? Evidence from an RCT

Last registered on March 26, 2025
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Pre-Trial

Trial Information

General Information

Title
Small firms' financial decisions under social factors and information complexity: does financial literacy play a role? Evidence from an RCT
RCT ID
AEARCTR-0015614
Initial registration date
March 21, 2025

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
March 26, 2025, 9:19 AM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Name
Alessio D'Ignazio
Affiliation
Bank of Italy
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Other Primary Investigator(s)

PI Name
Marco Panfili
PI Affiliation
Bank of Italy
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PI Name
Ludovica Galotto
PI Affiliation
Bank of Italy
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PI Name
Armando Maglio
PI Affiliation
Bank of Italy
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PI Name
Ginevra Buratti
PI Affiliation
Bank of Italy
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Additional Trial Information

Status
In development
Start date
2025-03-24
End date
2026-03-23
Keywords
Education, Finance & Microfinance, Firms & Productivity
Additional Keywords
Financing decision-making, Micro-entrepreneurs, Financial literacy, Biases, Survey Experiments
JEL code(s)
C9, D22, G21, G53
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
This project examines how biases influence financing decisions and whether the potential distortions caused by these biases are mitigated by entrepreneurs' financial literacy. The paper addresses three key questions: (i) how does the complexity of financial information affect entrepreneurial decision-making? (ii) to what extent does pressure from peers shape financial choices? (iii) can financial literacy mitigate the potential distortive effects identified in (i) and (ii)? To investigate these questions, we designed a survey experiment involving approximately 5,000 micro-entrepreneurs, with a control group and two treatment groups. The experiment, which is embedded in the the survey on financial literacy and digitalization of small businesses in Italy conducted by the Bank of Italy, is administered to respondents via CAWI (Computer-Assisted Web Interviewing). This research aims to offer valuable insights for developing more effective financial education programs and initiatives, empowering firms to make more informed decisions.
External Link(s)

Registration Citation

Citation
Buratti, Ginevra et al. 2025. "Small firms' financial decisions under social factors and information complexity: does financial literacy play a role? Evidence from an RCT." AEA RCT Registry. March 26. https://doi.org/10.1257/rct.15614-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2025-03-24
Intervention End Date
2025-05-26

Primary Outcomes

Primary Outcomes (end points)
Micro-entrepreneurs’ financing choices
Primary Outcomes (explanation)
We will primarily measure:
• Impact of the two treatments on the share of the respondents choosing overdraft vs. long-term loan
• (Any) differential impact of the treatments by respondent’s financial literacy and other characteristics (such as firm size, entrepreneurs’ gender, age, level of education and other observables)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
In the experiment, micro-entrepreneurs are asked to choose between two options to finance an investment good: an overdraft or a 6-year long-term loan. The long-term loan is considerably less expensive than the overdraft.
Firms are randomly assigned to one of three groups:
• A control group, which receives simplified information about the financing conditions of the two options.
• A complexity treatment group, which is presented with a more detailed (hence more complex) set of information related to the long-term loan.
• A peer pressure treatment group, which is provided with the same information about the financing conditions as the control group and in addition, information on the financing choices of peers in the previous year. In detail, participants are informed that most of their peers have used an overdraft in the past year.
Experimental Design Details
Not available
Randomization Method
Randomization is carried out through simple computer-based randomization by the company responsible for administering the survey.
Randomization Unit
The individual survey respondent.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
//
Sample size: planned number of observations
Among the approximately 5,000 micro-entrepreneurs that will take part to the survey, the analysis will focus on the subset of those who will be reached through CAWI.
Sample size (or number of clusters) by treatment arms
Around 1600 micro-entrepreneurs at most (i.e., CAWI only, see above) for each group.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials

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IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan