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Do Microfinance Clients Benefit from Business Advice Services? Evidence from a Training and Consulting Program in Indonesia
Last registered on December 06, 2018

Pre-Trial

Trial Information
General Information
Title
Do Microfinance Clients Benefit from Business Advice Services? Evidence from a Training and Consulting Program in Indonesia
RCT ID
AEARCTR-0003625
Initial registration date
December 02, 2018
Last updated
December 06, 2018 8:34 AM EST
Location(s)
Primary Investigator
Affiliation
University of Mannheim
Other Primary Investigator(s)
PI Affiliation
University of Mannheim, C4ED
PI Affiliation
University of Bonn, C4ED
PI Affiliation
University of Mannheim, C4ED
Additional Trial Information
Status
On going
Start date
2017-08-01
End date
2019-11-24
Secondary IDs
Abstract
Helping microentrepreneurs increase their profits is believed to be a promising tool in the self-help advocating development aid aiming to reach a large number of households threatened by poverty. Initiatives tackling the micro-level inhibitors to MSE growth are increasingly focusing on addressing the lack of business skills and managerial capital, with donors and practitioners pioneering a vast range of training courses to this end. Our study evaluates the PROMISE-IMPACT, Promoting Micro and Small Enterprises through Improved Entrepreneurs’ Access to Financial Services, initiated by the ILO in Indonesia and implemented by thirteen micro-Financial Service Provider, short FSPs. The program supports existing clients of the FSPs to explore whether business development services combined with finance can result in greater productivity and growth for the enterprises. As such, it provides classroom training and/ or individual consulting to MSEs, with a focus on financial management and marketing skills. Our research design is an RCT with more than 5,000 clients of the FSPs randomly assigned to one of the three treatment arms or the control group in winter 2017/2018. The treatment arms are: (1) Only classroom training, (2) only individual counseling, or (3) classroom training combined with individual counseling in follow-up visits, all provided by trained loan officers of the FSPs. Our research contributes to a growing body of evidence by tackling the following research questions: First, we investigate whether MSEs in Indonesia on average benefit from classroom training and/ or individual counseling. Second, we investigate who benefits the most from which type of business support.
External Link(s)
Registration Citation
Citation
Avdeenko, Alexandra et al. 2018. "Do Microfinance Clients Benefit from Business Advice Services? Evidence from a Training and Consulting Program in Indonesia ." AEA RCT Registry. December 06. https://doi.org/10.1257/rct.3625-1.0.
Former Citation
Avdeenko, Alexandra et al. 2018. "Do Microfinance Clients Benefit from Business Advice Services? Evidence from a Training and Consulting Program in Indonesia ." AEA RCT Registry. December 06. https://www.socialscienceregistry.org/trials/3625/history/38435.
Sponsors & Partners

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Experimental Details
Interventions
Intervention(s)
Our study evaluates the Promoting Micro and Small Enterprises through Improved Entrepreneurs’ Access to Financial Services (PROMISE-IMPACT) initiated by the International Labour Organization (ILO) in Indonesia and implemented by thirteen micro-Financial Service Providers (FSPs) in East and West Java, which included savings and credit cooperatives, rural banks, and development banks. The program supports existing clients of the FSPs to explore whether business development services combined with finance can result in greater productivity and growth for the enterprises. As such, it provides classroom training and individual consulting to MSEs. FSPs chose whether to implement three treatment arms (training, counselling and both) or one treatment arm (training and counselling). FSPs in Batch I chose all three treatment arms, whereas FSPs in Batch II and Batch III chose only the “training and counselling” treatment. Once the program was chosen, the research group randomized which FSP client receives which type of treatment. Eligible clients in this treatment are predominantly (though not exclusively) microenterprises in the manufacturing sector. The focus of the support lies on improving financial management and marketing.
Intervention Start Date
2018-01-01
Intervention End Date
2018-11-30
Primary Outcomes
Primary Outcomes (end points)
growth in enterprises; profits; firm survival or additional start-ups; business environment rating; financial situation of the household; life satisfaction; business loans; loan behavior of clients
Primary Outcomes (explanation)
Share of clients reporting being late with the loan payment at the FSP
Currently in loan default or behind with repayments for any loan
Current/ last loan used for productive purposes
Total loans outstanding from all sources in ths IDR, winsorized
FSP unchanged: total loan amount at this institution in ths IDR, winsorized
FSP changed: total loan amount at this institution in ths IDR, winsorized
Last loan amount in mln IDR, winsorized
Change in life satisfaction (now - two years ago)
Satisfaction with current life: 1=worst, 10=best
Change in HH expenditure in the last 6 months
Aggregate HH spending in ths IDR, winsorized
Total savings from all sources in ths IDR, winsorized
Business perception index (standardized score)
New business started in 2018 (in addition to current business)
Profit increased during the last 6 months
Share of business earnings covers the expenses of this business
Profit generated in the last month (30 days) in mln IDR, winsorized
Profit in the worst month ths IDR, winsorized
Profit in the best month in ths IDR, winsorized
Total cost of business in the last month (30 days) in ths IDR, winsorized
Nr of permanent and casual workers (sum), winsorized
Revenue generated in the last month (30 days) in mln IDR, winsorized
Share of clients reporting being late with the loan payment at the FSP
Currently in loan default or behind with repayments for any loan
Current/ last loan used for productive purposes
Total loans outstanding from all sources in ths IDR, winsorized
Secondary Outcomes
Secondary Outcomes (end points)
Best practices of marketing, best practices of financial management, behavioral changes in marketing practices, behavioral changes in financial management practices
Secondary Outcomes (explanation)
Business is registered
Pays income tax for business
Financial management practices index
Preparing business plan (incl. financial plan)
Business plan includes plan how to improve a product
Business plan includes plan how to reach a new market
Business plan includes expected sales and costs
Business plan includes Cash Flow
Share of clients investing profit into the business
Share of clients keeping finances separately from the HH
Nr of different marketing forms used
Share of MSE exporting outside Indonesia
Marketing practices index
Answered correctly: Purpose of business plan
All the money coming in and going out.
Answered correctly: More liabilities than assets means
Share of financial management knowledge questions answered correctly
Answered correctly: First thing to do in marketing
Answered correctly: Total profit depends on
Share of marketing knowledge questions answered correctly
Experimental Design
Experimental Design
The participating financial service providers chose themselves which of the three treatment arms they would like to offer. FSPs in Batch I chose all three treatment arms, whereas FSPs in Batch II and Batch III chose only the “training and counseling” treatment. After the baseline survey, we randomized the clients of the FSPs into the treatment arm. For logistic reason, we ran the randomization procedure for each batch separately at different points of time.

Experimental Design Details
See Pre-Analysis Plan attached.
Randomization Method
Randomization done in office by a computer.
Randomization Unit
Individual (for program) and cluster (for variation nr of clients treated).

Randomization is at the individual level. Individuals are randomly allocated to either treatment or control or to different treatment arms (depending on the type of FSP they are served by). While randomization is at the individual level, the randomization applies a two-stage procedure: first, the treatment probability is allocated at the branch/ cashpoint level, and second, individuals within a branch/ cashpoint are allocated to treatment. As a consequence of the random assignment of treatment probabilities, we allocated a larger number of clients to treatment in some branch/ cashpoints than in others. The allocation procedure followed a re-randomization approach whereby we only retained those randomization vectors that passed a balancing threshold, and of these, the first is kept for the actual randomization.
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
13 financial institutions, for logistic reasons divided into three batches.
Total of 141 branches/ cashpoints (thereof 26 in Batch I, 86 in Batch II and 29 in Batch III).
Sample size: planned number of observations
5,257 individuals (MSE owners)
Sample size (or number of clusters) by treatment arms
1,909 individuals in the “Training and Counseling” treatment (thereof 763 in Batch I)
738 individuals in the “Training only” treatment (all Batch I)
763 individuals in the “Counseling only” treatment (all in Batch I)
1,847 individuals in the Control group (thereof 766 Batch I, 641 Batch II, 440 Batch III)
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Power calculations have been conducted after the baseline survey of Batch I and prior to the roll-out of the program. Hence, the calculations are drawn from the raw data on Batch I (six FSPs). Even though the power calculation is based only on the first six FSPs, we expect the power to increase with the additional observations from clients in Batch II and III. In the analysis, we consider revenue and profit in US Dollar as well as the number of permanent, non-family workers as our main outcome of interest. For the calculations, we assumed the standard significance level of 0.05 and a power of 0.8. The base-levels for the monthly profit and revenue and the total number of non-family workers are 685.70 US Dollar, 236.41 US Dollar and 1.04 workers respectively. The standard deviation for the monthly profit and revenue and the total number of non-family workers are 733.81 US Dollar, 261.48 US Dollar and 2.97 workers respectively. We divide the observations into four groups, according to the three treatment arms (Training, Counseling and Training and Counseling) chosen by Batch I and a control group. The relative mean detectable effect size (MDE percent) for revenue in US Dollar is 0.15 when comparing each treatment arm to the control group. Comparing all treatment arms together to the control group gives a relative MDE of 0.13. For profit it is 0.16 and 0.13 and for total number of non-family, permanent worker 0.407 and 0.332, respectively.
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
University of Mannheim
IRB Approval Date
2018-09-28
IRB Approval Number
N/A
Analysis Plan

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Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
No
Is data collection complete?
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
Reports and Papers
Preliminary Reports
Relevant Papers