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A recent study suggests that cash grants may be more effective than matching grants, especially in supporting small businesses in politically unstable environments where survival is the main concern. Economists from the University of Passau and the World Bank conducted this research in Burkina Faso, with their findings published in the Journal of Development Economics.
The debate over whether grants for small businesses should be flexible (cash grant) or earmarked (matching grant) with strict rules has been ongoing. To address this issue, researchers carried out a randomized controlled trial in Burkina Faso. The results showed that cash grants outperformed matching grants in terms of impact and cost-efficiency.
Professor Michael Grimm, leading author of the study titled ”Supporting small firms in a fragile context: Comparing matching and cash grants in Burkina Faso,” highlighted that beneficiaries of cash grants demonstrated higher survival rates, improved business practices, formalization, and innovation activities compared to those receiving matching grants or no support.
Together with co-authors Dr. Sidiki Soubeiga and Dr. Michael Weber, Professor Grimm conducted an experiment to assess interventions for enhancing firm growth and job creation in rural Burkina Faso. Cash grants provided flexibility for any business purpose while matching grants were designated for specific services like technical training.
2024-11-21 15:15:04
Source from phys.org