Financial Literacy and Financial Behaviour: Experimental Evidence from Rural Rwanda
Author(s) -
Sayinzoga Aussi,
Bulte Erwin H.,
Lensink Robert
Publication year - 2016
Publication title -
the economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.683
H-Index - 160
eISSN - 1468-0297
pISSN - 0013-0133
DOI - 10.1111/ecoj.12217
Subject(s) - financial literacy , test (biology) , finance , business , literacy , economics , economic growth , paleontology , biology
We organise a field experiment with smallholder farmers in Rwanda to measure the impact of financial literacy training on financial knowledge and behaviour. The training increased financial literacy of participants, changed their savings and borrowing behaviour and had a positive effect on the new business start‐up. However, it failed to have a significant (short‐term) impact on income. Using a two‐stage regression framework, we identify enhanced financial literacy as one of the important factors explaining behavioural changes. We also test whether financial knowledge spillovers from trained farmers to their peers in local village banks but find no evidence for that.
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