Saving for a Productive Day: Brick Industry Entrepreneurs

Recent research has revealed much about the effects of providing access to credit, but little is known about why entrepreneurs with potentially profitable businesses do not reinvest in their small businesses, allowing them to gradually rise out of poverty. Models of financial constraints with concave production predict that all entrepreneurs will eventually invest themselves out of poverty. If investments require large fixed costs for increased future productivity, versus enjoying higher immediate consumption, entrepreneurs face a tradeoff.

Daniel Keniston's research project examines under what circumstances entrepreneurs will save and, in particular, under what circumstances credit and savings interventions would be most effective.

Keniston is analyzing returns to capital and investment costs of a single industry, brickmaking in India. The technology involved in brick production involves large investments in brick kilns and, thus, requires access to capital markets for both savings and credit. Keniston is collecting detailed questionnaires from 600 brickmaking owners about their wealth, savings, current borrowing and potential access to credit. He will also detail the owners' personal consumption to see if they are credit constrained.

The data from these questionnaires is combined with data collected from another, separate, more traditional firm survey (not funded by CFSP) and together form the basis of the analysis of whether and when entrepreneurs can overcome fixed costs of investments through savings and reinvestment.

Research Questions: 
  • Under what circumstances will entrepreneurs carry out savings strategies, versus enjoying a higher immediate consumption?
  • Under what circumstances would credit and savings interventions be most effective?
  • What are the characteristics of the firm owner, including household information, parental characteristics, education, experience and other income?
  • What are the sources of credit and financing for brickmaking owners?
  • What rate of interest are brick firms obtaining on their loans?
  • What kinds of savings vehicles do brickmaking entrepreneurs participate in?
  • How much have owners saved the in the past month or year?
  • When do owners withdraw from their savings accounts? Is it to fund day-to-day expenses or to finance a large expense?
Data Notes: 


  • Brick manufacturers in India

Survey Size

  • 600 Firms


  • Firm-level survey containing three elements:
    • Market-level census of brick manufacturers
    • Entrepreneur-level survey of brick manufacturers
    • Questionnaire on firm physical production, revenues, input and output use and capital stock