A global research initiative providing insight into the financial lives of small firms
The project aims at better understanding the determinants and constraints of private sector development in low-income countries. The current knowledge is mainly provided by randomized interventions on cross-sections of enterprises. While these studies are useful in assessing the impact of a broad range of interventions (e.g. the importance of accounting, financial literacy, technology adoption, etc.) on the average firm, it often remains a puzzle why interventions have a limited impact (either in the short or in the long run), and how dependent they are on the specific context of the study. Our proposal intends to take a step back, and to follow a large number of small enterprises (5 to 20 employees) in different contexts. This multi-country study will collect high-frequency, quantitative, and qualitative data across seven countries in Latin America, Sub-Saharan Africa, Southeast Asia, and the Pacific. The purpose is twofold. First, during one year, we want to gather monthly information from the businesses to better understand their lifecycle. While most research studies produce static snapshots of a single point in time, financial diaries create dynamic and nuanced portraits using a combination of methods. Second, based on this information, we will define and test interventions that are tailored to the needs of the enterprises to reduce their volatility or to help them grow.
Principal investigators: Jonathan Morduch (NYU), Timothy Ogden (NYU), Lore Vandewalle (Graduate Institute), Julia Cajal-Grossi (Graduate Institute), Christopher Woodruff (Oxford), and Ryan Edwards (Australian National University)