ADOPEM's Rule-of-Thumb Financial Literacy Training for Santo Domingo Microentrepreneurs

Banco ADOPEM, a microfinance institution serving low-income entrepreneurs in the Dominican Republic, worked with researchers Alejandro Drexler, Gregory Fischer and Antoinette Schoar to randomise 1,193 existing clients in Santo Domingo into a six-week standard accounting course (402 clients), a five-week simplified 'rule-of-thumb' course teaching financial heuristics (404 clients), or a no-training comparison group (387 clients), between November 2006 and July 2008.

Clients who received the rule-of-thumb training were 6 to 12 percentage points more likely than the comparison group to keep accounting records and to maintain separate books for business and personal expenses, and reported more accurate, internally consistent revenue figures. The standard accounting course produced smaller gains overall.

The rule-of-thumb approach's advantage was concentrated among entrepreneurs who started with the weakest financial skills or the poorest initial bookkeeping practices — clients who were already numerate and organised gained comparatively little extra from either course, so simplification is not a universal fix.

Read the full analysis: https://eprints.lse.ac.uk/46797/1/Fischer_Keeping_it_simple.pdf