Can micro-credit support public health subsidy programs?

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IFS Working Papers ; No. W19/10

Classification and Topics

• Classification: Wirtschaft ; Household Saving; Personal Finance ; Behavioral Finance: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets‡ ; Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes ; Health Behavior ; Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs ; Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Augsburg, Britta ; Caeyers, Bet ; Malde, Bansi
• Event: Veröffentlichung
• (who): Institute for Fiscal Studies (IFS)
• (where): London
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/200329
• Last update: 10.03.2025, 11:43 AM CET