Complementing Business Training with Access to Finance: Evidence from SMEs in Kenya

This paper investigates the complementarity between business training and timely access to financial capital for small and medium enterprises (SMEs) in Kenya. All participants in the business support program we study were offered training. One-third of participants are offered loans immediately after training (Concurrent Loan group), one-third are offered loans six weeks after training (Delayed Loan group), and the remaining third are offered loans after another four weeks (Control group). While a long time lag may reduce knowledge retention and application among SMEs, concurrent access to loans and associated business spending may divert the entrepreneurs’ attention away from improving business practices. We find evidence for the latter in both intention-to-treat and treatment-on-the-treated estimates. While SMEs in both Control and Delayed Loan groups improve their business practices, SMEs in the Concurrent Loan group who take loans do not improve their practices at all. Moreover, entrepreneurs who take loans spend less time on their businesses and experience declines in their business revenue. The supplementary materials contain the two main datasets and associated codes required to generate the figures and tables in the paper. Both the datasets are in panel formats where each business is identified using a unique identifier. More descriptions of the data can be found in the paper.