lnstitute for Fiscal Studies - Labeled loans and human capital investments

In the final part of the paper, we investigate how the availability of a sanitation subsidy to a sub-set of our study households through the Government of India (GoI)’s flagship SBM policy affects household responses to the sanitation loan intervention. [...] Loan offi- cers introduced the new sanitation loan product with a short message explaining the benefits of investing in a safe toilet, before outlining features of the loan product, including the weekly or bi-weekly installment amounts.8 After the initial introduction, loan officers marketed the sani- 8Prior to the launch of the sanitation loan within a branch, all loan officers were trained by a. [...] A number of mechanisms were put in place to avoid contamination of control GPs, rang- ing from loan officer training conducted by the research team in every branch, to putting up a pictoral reminder of the GPs where the sanitation loans should not be offered on the walls of branch offices, and the generation of automatic red flags in the MFI’s management and infor- mation system when clients in co. [...] 19The reason for restricting the sample to MF clients who were active at the time of the baseline survey is to avoid potential selection bias due to the possibility that people who are especially motivated to invest in sanitation decided to join the MFI in response to the sanitation loan treatment in treated areas. [...] If a toilet was in the dwelling when household moved in we consider the number of years the HH head lived in the household as a proxy for the construction date.