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on Microfinance |
| By: | Britta Augsburg (Institute for Fiscal Studies and Institute for Fiscal Studies); Bet Caeyers (Institute for Fiscal Studies and Institute for Fiscal Studies); Bansi Malde (Institute for Fiscal Studies and Institute for Fiscal Studies) |
| Abstract: | The low take-up of cost-effective and highly subsidised preventive health technologies in low-income countries remains a puzzle. One under-studied reason is that the design of subsidy schemes is such that households remain financially constrained. In this paper we analyse whether, and how, micro-finance supports a large public health subsidy program in the developing world - the Swachh Bharat Mission - in achieving its aim of increasing uptake of individual household latrines. Exploiting a cluster randomised controlled experiment of a sanitation micro-finance program that coincided with the launch of the SBM program, and unique survey data matched to administrative data, we find that the complementarity runs on two levels: First, micro-credit allows households officially ineligible for the subsidy to invest in sanitation by alleviating credit constraints. Second, micro-credit also helps subsidy eligible households to overcome short-term liquidity constraints induced by the remuneration-post-verification subsidy design to invest in sanitation. Subsidy eligible households living in areas experiencing large delays in subsidy disbursement, or high toilet costs, are more likely to take a sanitation loan, but less likely to use the loan to construct a toilet. |
| Keywords: | micro-finance,credit constraints,toilets,public health |
| Date: | 2019–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:19/10&r=all |
| By: | Britta Augsburg (Institute for Fiscal Studies and Institute for Fiscal Studies); Bet Caeyers (Institute for Fiscal Studies and Institute for Fiscal Studies); Sara Giunti (Institute for Fiscal Studies and Institute for Fiscal Studies); Bansi Malde (Institute for Fiscal Studies and Institute for Fiscal Studies); Susanna Smets (Institute for Fiscal Studies) |
| Abstract: | Credit constraints are considered to be an important barrier hindering adoption of preventive health investments among low-income households in developing countries. However, it is not obvious whether, and the extent to which, the provision of labelled micro-credit (where the loan is linked to the investment only through its label) will boost human capital investments, particularly when it is characterised by other attractive attributes, such as a lower interest rate. We study a cluster randomised controlled trial of a sanitation micro-credit program in rural India, which made available lower interest loans for sanitation. The loans were linked with sanitation through their name only. The loans were not bundled with any toilet, and loan use was weakly monitored, but not enforced. Hence it is not directly obvious that the loan should boost sanitation investments. A simple theoretical framework indicates that the intervention could increase sanitation ownership through three channels - relaxation of credit constraints, salience of the loan label, or the lower interest rate. Our empirical evidence, combined with model predictions, allows us to conclude that the loan label (which to date has not received much attention in the literature) significantly impacts households borrowing and investment behaviour. Labelling loans is thus a viable strategy to improve uptake of lumpy preventive health investments. |
| Keywords: | credit,micro-credit,sanitation,toilets,loans,labelled loans |
| Date: | 2019–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:19/09&r=all |
| By: | Batista, Catia (Universidade Nova de Lisboa); Vicente, Pedro C. (Universidade Nova de Lisboa) |
| Abstract: | Investment in improved agricultural inputs is infrequent for smallholder farmers in Africa. One barrier may be limited access to formal savings. This is the first study to use a randomized controlled trial to evaluate the impact of using mobile money as a tool to promote agricultural investment. For this purpose, we designed and conducted a field experiment with a sample of smallholder farmers in rural Mozambique. This sample included a set of primary farmers and their closest farming friends. We work with two cross-randomized interventions. The first treatment gave access to a remunerated mobile savings account. The second treatment targeted closest farming friends and gave them access to the exact same interventions as their primary farmer counterparts. We find that the remunerated mobile savings account raised mobile savings, but only while interest was being paid. It also increased agricultural investment in fertilizer, although there was no change in investment in other complementary inputs that were not directly targeted by the intervention, unlike fertilizer. These results suggest that fertilizer salience in the remunerated savings treatment may have been important to focus farmers' (limited) attention on saving some of their harvest proceeds, rather than farmers being financially constrained by a lack of alternative ways to save. Our results also suggest that the network intervention where farming friends had access to non-remunerated mobile money accounts decreased incentives to save and invest in agricultural inputs, likely due to network free-riding because of lower transfer costs within the network. Overall this research shows that tailored mobile money products can be used effectively to improve modern agricultural technology adoption in countries with very low agricultural productivity like Mozambique. |
| Keywords: | mobile money, social networks, savings and agricultural investment, randomized field experiment, Mozambique, Africa |
| JEL: | D14 D85 Q12 Q14 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12813&r=all |
| By: | Marcos Santos Meneghini |
| Abstract: | This study uses land endowment as an instrumental variable to estimate the impact of cooperative credit on income of Parana State municipalities. The processes of colonization and territorial occupation established between XVII and XX centuries allow to distinguish locally the formation of social capital, the reduction of market failures in financial intermediation and its influence on economic development. The credit-income elasticity suggests that an 1% increase in cooperative credit supply causes a 0.31% increase in municipal per capita agricultural income. |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:bcb:wpaper:510&r=all |