IDEAS home Printed from https://ideas.repec.org/a/eee/socmed/v270y2021ics0277953620308522.html
   My bibliography  Save this article

Microcredit as a public health initiative? Exploring mechanisms and pathways to health and wellbeing

Author

Listed:
  • Ibrahim, Fatma
  • McHugh, Neil
  • Biosca, Olga
  • Baker, Rachel
  • Laxton, Tim
  • Donaldson, Cam

Abstract

The widening health gap between the best and worst-off in the UK requires innovative solutions that act upon the social, economic and environmental causes of ill-health. Initiatives such as microcredit have been conceptualised as having the potential to act on the social determinants of health. However, pathways that lead to this impact have yet to be empirically explored. People living on low incomes, who are financially-excluded, require access to credit to cope with everyday financial needs. While research shows the connections between debt and health, this link is often focused on over-indebtedness and negative health outcomes. In this paper, we investigate the impact of responsibly-delivered credit on the health and wellbeing of borrowers. In 2016-17, in-depth, semi-structured interviews were undertaken with fourteen borrowers from two microcredit providers offering personal and business microloans, operating in Glasgow, United Kingdom. Findings are presented, using social determinants of health as an analytic lens, and illustrated in a conceptual model explaining the loan mechanisms and pathways connecting microcredit to health and wellbeing. Microcredit, and the mechanisms through which it is delivered, were perceived by participants as positively impacting on their health and wellbeing. Access to flexible, responsibly-delivered, microloans enabled participants to plan and feel secure when faced with (un)expected financial events, reducing the associated stress, sustaining social relationships and empowering borrowers to take greater control over their lives. For some, receiving microcredit was stressful, as it is still a debt that needs to be repaid. Such stress can also be exacerbated by particular aspects of the lending model; for example, group lending. Our results contribute to growing evidence on the impact of financial inclusion approaches on health and wellbeing, highlighting the potential role of microcredit as a public health initiative and the need to support ‘alternative’ economic spaces in the UK to serve the financially-excluded.

Suggested Citation

  • Ibrahim, Fatma & McHugh, Neil & Biosca, Olga & Baker, Rachel & Laxton, Tim & Donaldson, Cam, 2021. "Microcredit as a public health initiative? Exploring mechanisms and pathways to health and wellbeing," Social Science & Medicine, Elsevier, vol. 270(C).
    • Handle: RePEc:eee:socmed:v:270:y:2021:i:c:s0277953620308522
    DOI: 10.1016/j.socscimed.2020.113633
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0277953620308522
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.socscimed.2020.113633?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ngo, Thi Minh-Phuong & Wahhaj, Zaki, 2012. "Microfinance and gender empowerment," Journal of Development Economics, Elsevier, vol. 99(1), pages 1-12.
    2. Brown, Sarah & Taylor, Karl & Wheatley Price, Stephen, 2005. "Debt and distress: Evaluating the psychological cost of credit," Journal of Economic Psychology, Elsevier, vol. 26(5), pages 642-663, October.
    3. Selenko, Eva & Batinic, Bernad, 2011. "Beyond debt. A moderator analysis of the relationship between perceived financial strain and mental health," Social Science & Medicine, Elsevier, vol. 73(12), pages 1725-1732.
    4. Pronyk, Paul M. & Harpham, Trudy & Busza, Joanna & Phetla, Godfrey & Morison, Linda A. & Hargreaves, James R. & Kim, Julia C. & Watts, Charlotte H. & Porter, John D., 2008. "Can social capital be intentionally generated? A randomized trial from rural South Africa," Social Science & Medicine, Elsevier, vol. 67(10), pages 1559-1570, November.
    5. Beatriz Armendáriz & Jonathan Morduch, 2010. "The Economics of Microfinance, Second Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262014106, December.
    6. Reading, Richard & Reynolds, Shirley, 2001. "Debt, social disadvantage and maternal depression," Social Science & Medicine, Elsevier, vol. 53(4), pages 441-453, August.
    7. Lindsey Appleyard, 2013. "The Geographies of Access to Enterprise Finance: The Case of the West Midlands, UK," Regional Studies, Taylor & Francis Journals, vol. 47(6), pages 868-879, June.
    8. Drentea, Patricia & Lavrakas, Paul J., 2000. "Over the limit: the association among health, race and debt," Social Science & Medicine, Elsevier, vol. 50(4), pages 517-529, February.
    9. Manuela Angelucci & Dean Karlan & Jonathan Zinman, 2015. "Microcredit Impacts: Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 151-182, January.
    10. Frederick J. Zimmerman & Wayne Katon, 2005. "Socioeconomic status, depression disparities, and financial strain: what lies behind the income‐depression relationship?," Health Economics, John Wiley & Sons, Ltd., vol. 14(12), pages 1197-1215, December.
    11. Sweet, Elizabeth & Nandi, Arijit & Adam, Emma K. & McDade, Thomas W., 2013. "The high price of debt: Household financial debt and its impact on mental and physical health," Social Science & Medicine, Elsevier, vol. 91(C), pages 94-100.
    12. Andrew Leyshon & Dawn Burton & David Knights & Catrina Alferoff & Paola Signoretta, 2004. "Towards an Ecology of Retail Financial Services: Understanding the Persistence of Door-to-Door Credit and Insurance Providers," Environment and Planning A, , vol. 36(4), pages 625-645, April.
    13. Erica Field & Rohini Pande & John Papp & Y Jeanette Park, 2012. "Repayment Flexibility Can Reduce Financial Stress: A Randomized Control Trial with Microfinance Clients in India," PLOS ONE, Public Library of Science, vol. 7(9), pages 1-7, September.
    14. Katherine Mohindra & Slim Haddad, 2005. "Women's Interlaced Freedoms: A Framework Linking Microcredit Participation and Health," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 6(3), pages 353-374.
    15. Matteo Pedrini & Valentina Bramanti & Marco Minciullo & Laura Maria Ferri, 2016. "Rethinking Microfinance for Developed Countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 28(2), pages 281-302, March.
    16. Clayton, Maya & Liñares-Zegarra, José & Wilson, John O.S., 2015. "Does debt affect health? Cross country evidence on the debt-health nexus," Social Science & Medicine, Elsevier, vol. 130(C), pages 51-58.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Godsway Korku Tetteh, 2023. "Local digital lending development and the incidence of deprivation in Kenya," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-26, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hojman, Daniel A. & Miranda, Álvaro & Ruiz-Tagle, Jaime, 2016. "Debt trajectories and mental health," Social Science & Medicine, Elsevier, vol. 167(C), pages 54-62.
    2. Sweet, Elizabeth & Nandi, Arijit & Adam, Emma K. & McDade, Thomas W., 2013. "The high price of debt: Household financial debt and its impact on mental and physical health," Social Science & Medicine, Elsevier, vol. 91(C), pages 94-100.
    3. Joaquín Prieto, 2021. "A multidimensional approach to measuring economic insecurity: The case of Chile," Working Papers 591, ECINEQ, Society for the Study of Economic Inequality.
    4. Meishan Jiang & Krishna P. Paudel & Fan Zou, 2020. "Do Microcredit Loans Do What They Are Intended To Do? A Case Study of the Credit Village Microcredit Programme in China," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(5), pages 763-792, July.
    5. Daniel Hojman & Alvaro Miranda & Jaime Ruiz-Tagle, 2013. "Over Indebtedness and Depression: Sad Debt or Sad Debtors?," Working Papers wp385, University of Chile, Department of Economics.
    6. Cesar Leandro, Julio & Botelho, Delane, 2022. "Consumer over-indebtedness: A review and future research agenda," Journal of Business Research, Elsevier, vol. 145(C), pages 535-551.
    7. Hyunjoon Um, 2019. "The Role of Child Support Debt on the Development of Mental Health Problems among Nonresident Fathers," Working Papers wp19-05-ff, Princeton University, School of Public and International Affairs, Center for Research on Child Wellbeing..
    8. French, Declan & Vigne, Samuel, 2019. "The causes and consequences of household financial strain: A systematic review," International Review of Financial Analysis, Elsevier, vol. 62(C), pages 150-156.
    9. Irina Grafova, 2011. "Financial Strain and Smoking," Journal of Family and Economic Issues, Springer, vol. 32(2), pages 327-340, June.
    10. Piotr Bialowolski & Dorota Weziak-Bialowolska & Eileen McNeely, 2021. "The Role of Financial Fragility and Financial Control for Well-Being," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 155(3), pages 1137-1157, June.
    11. Prieto, Joaquin, 2021. "A multidimensional approach to measuring economic insecurity: the case of Chile," LSE Research Online Documents on Economics 112490, London School of Economics and Political Science, LSE Library.
    12. Soomin Ryu & Lu Fan, 2023. "The Relationship Between Financial Worries and Psychological Distress Among U.S. Adults," Journal of Family and Economic Issues, Springer, vol. 44(1), pages 16-33, March.
    13. Piotr Bialowolski & Dorota Weziak‐Bialowolska, 2021. "Good credit, bad credit: The differential role of the sources of debt in life satisfaction," Journal of Consumer Affairs, Wiley Blackwell, vol. 55(3), pages 967-994, September.
    14. Antonia Grohmann & Jana Hamdan, 2021. "The Effect of Self-Control and Financial Literacy on Impulse Borrowing: Experimental Evidence," Discussion Papers of DIW Berlin 1950, DIW Berlin, German Institute for Economic Research.
    15. Piotr Białowolski & Dorota Węziak-Białowolska, 2017. "What Does a Swiss Franc Mortgage Cost? The Tale of Polish Trust for Foreign Currency Denominated Mortgages: Implications for Well-Being and Health," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(1), pages 285-301, August.
    16. João Paulo Coelho Ribeiro & Fábio Duarte & Ana Paula Matias Gama, 2022. "Does microfinance foster the development of its clients? A bibliometric analysis and systematic literature review," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-35, December.
    17. Manuel, Jennifer I. & Martinson, Melissa L. & Bledsoe-Mansori, Sarah E. & Bellamy, Jennifer L., 2012. "The influence of stress and social support on depressive symptoms in mothers with young children," Social Science & Medicine, Elsevier, vol. 75(11), pages 2013-2020.
    18. Selenko, Eva & Batinic, Bernad, 2011. "Beyond debt. A moderator analysis of the relationship between perceived financial strain and mental health," Social Science & Medicine, Elsevier, vol. 73(12), pages 1725-1732.
    19. Blázquez, Maite & Budría, Santiago & Moro-Egido, Ana I., 2020. "Over-indebtedness and age: The effects on individual health," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 87(C).
    20. Clayton, Maya & Liñares-Zegarra, José & Wilson, John O.S., 2015. "Does debt affect health? Cross country evidence on the debt-health nexus," Social Science & Medicine, Elsevier, vol. 130(C), pages 51-58.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:socmed:v:270:y:2021:i:c:s0277953620308522. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/315/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.