Labelled loans and human capital investments
Britta Augsburg,
Bet Caeyers,
Sara Giunti,
Bansi Malde and
Susanna Smets
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Bet Caeyers: Institute for Fiscal Studies and Institute for Fiscal Studies
Susanna Smets: Institute for Fiscal Studies
No W21/09, IFS Working Papers from Institute for Fiscal Studies
Abstract:
Imperfect capital markets and commitment problems impede lumpy human capital investments. Labelled loans can alleviate both constraints, but little is known about their effectiveness in practice. We draw on a cluster randomized controlled trial in rural India to provide the first evidence that labelled microcredit is effective in increasing take-up of a lumpy human capital investment, a safe toilet. Testing predictions from a theoretical model provides novel evidence that loan labels influence household borrowing and investment decisions. Not all loans are used for sanitation investments, suggesting that loan labels offer a soft commitment incentive.
Date: 2021-04-27
New Economics Papers: this item is included in nep-dev, nep-exp, nep-his and nep-mfd
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Citations: View citations in EconPapers (2)
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Related works:
Journal Article: Labeled loans and human capital investments (2023) 
Working Paper: Labeled loans and human capital investments (2023) 
Working Paper: Labelled Loans and Human Capital Investments (2020) 
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