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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