Labelled loans and human capital investments

Arbeitspapier

Making lumpy human capital investments is difficult, particularly since returns may accrue with a significant time lag. Lack of commitment impedes savings and diverts funds from intended investments. We draw on a cluster randomised 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IFS Working Papers ; No. W20/20

Classification and Topics

• Classification: Wirtschaft ; Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance ; Household Saving; Personal Finance ; Behavioral Finance: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets‡ ; Health Behavior
• Subject: Bildungsinvestition ; Ländliche Entwicklung ; Mikrofinanzierung ; Indien

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Augsburg, Britta ; Caeyers, Bet ; Giunti, Sara ; Malde, Bansi ; Smets, Susanna
• Event: Veröffentlichung
• (who): Institute for Fiscal Studies (IFS)
• (where): London
• (when): 2020

Further information

• DOI: doi:10.1920/wp.ifs.2020.2020
• Handle: http://hdl.handle.net/10419/223296
• Last update: 10.03.2025, 11:41 AM CET