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Can Micro-Credit Support Public Health Subsidy Programs?

Author

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  • Britta Augsburg

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • Bet Caeyers

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • Bansi Malde

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

Abstract

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.

Suggested Citation

  • Britta Augsburg & Bet Caeyers & Bansi Malde, 2019. "Can Micro-Credit Support Public Health Subsidy Programs?," IFS Working Papers W19/10, Institute for Fiscal Studies.
  • Handle: RePEc:ifs:ifsewp:19/10
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    References listed on IDEAS

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    5. Augsburg,Britta & Caeyers,Bet & Giunti,Sara & Malde,Bansi Khimji & Smets,Susanna, 2019. "Labelled Loans, Credit Constraints and Sanitation Investments," Policy Research Working Paper Series 8845, The World Bank.
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    1. Augsburg,Britta & Caeyers,Bet & Giunti,Sara & Malde,Bansi Khimji & Smets,Susanna, 2019. "Labelled Loans, Credit Constraints and Sanitation Investments," Policy Research Working Paper Series 8845, The World Bank.

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    Keywords

    micro-finance; credit constraints; toilets; public health;
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