Our Research

The drivers of entrepreneurial ability

We have pilot tested various psychometric instruments on over 2000 entrepreneurs across Africa and Latin America, and are currently analyzing this data to better understand the psychological and intellectual drivers of entrepreneurial ability and risk of default. This research will lead to a series of papers on topics such as the role of intelligence versus personality in entrepreneurial ability, differences in the drivers of entrepreneurial ability across countries and cultures, and the interactions between business characteristics, personal characteristics, and firm performance.

Psychometric screening & Micro-Equity

Psychometric screening tools measure future upside potential rather than traditional risk management tools used by banks for debt contracts, which only measure downside risk. This makes psychometric screening particularly well-suited for alternative quasi/micro-equity instruments. Such contracts have the added advantage that they provide positive incentives for the investor by having them directly share in investee success. From the Islamic Finance perspective it also offers Shariah-compliant financial contracts. In partnership with the Harvard Kennedy School (HKS) Middle East Initiative and the HKS Belfer Center for Science and International Affairs Dubai Initiative we are also studying the applicability of these tools to the region and searching for partner financial institutions to gather data from local entrepreneurs.

Impact of psychometric screening on access to finance

The Entrepreneurial Finance Lab Research Initiative has partnered with EFL LLC, a private company working with financial institutions to implement psychometric screening tools, We are evaluating the impact of these pilot trials on risk, business performance, and overall access to finance.