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Can Micro-Credit Support Public Health Subsidy Programs?

Author

Listed:
  • 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 University of Kent)

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.

Suggested Citation

  • Britta Augsburg & Bet Caeyers & Bansi Malde, 2019. "Can Micro-Credit Support Public Health Subsidy Programs?," IFS Working Papers W19/10, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:19/10
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    File URL: https://www.ifs.org.uk/uploads/publications/wps/WP201910.pdf
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    References listed on IDEAS

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    Cited by:

    1. Augsburg, Britta & Caeyers, Bet & Giunti, Sara & Malde, Bansi & Smets, Susanna, 2023. "Labeled loans and human capital investments," Journal of Development Economics, Elsevier, vol. 162(C).
    2. Augsburg,Britta & Caeyers,Bet & Giunti,Sara & Malde,Bansi Khimji & Smets,Susanna, 2019. "Labelled Loans, Credit Constraints and Sanitation Investments," Policy Research Working Paper Series 8845, The World Bank.
    3. Acheampong, Alex O. & Opoku, Eric Evans Osei & Tetteh, Godsway Korku, 2024. "Unveiling the effect of income inequality on safe drinking water, sanitation and hygiene (WASH): Does financial inclusion matter?," World Development, Elsevier, vol. 178(C).

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    Keywords

    micro-finance; credit constraints; toilets; public health;
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