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WP202020-Labelled-Loans-and-Human-Capital-Investments.pdf
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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.
Authors
![Bansi Malde](/sites/default/files/styles/square_desktop/public/2023-11/Bansi%20Malde.jpg?itok=WUW9ECXS)
Research Fellow University of Kent
Bansi is a Research Fellow of the IFS, a Senior Lecturer of Economics at the University of Kent and also a Fellow at the Global Labor Organisation.
![Britta Augsburg](/sites/default/files/styles/square_desktop/public/2022-06/Britta_Augsburg.jpg?itok=xID4yUz7)
Associate Director
Britta is an IFS Associate Director, Associate Staff at the Department of Economics at the UC and Researcher at NIHR Obesity Policy Research Unit.
![Bet Caeyers](/sites/default/files/styles/square_desktop/public/2022-07/Bet%20Caeyers.jpg?itok=bwNU4I_c)
Research Associate Yale University, Stockholm University and FAIR/Norwegian School of Economics (NHH)
Bet is a Research Associate of the IFS who is an Adjunct Associate Professor at FAIR/Norwegian School of Economics (NHH).
![Person graphic](/sites/default/files/styles/square_desktop/public/2022-06/IFS-person-graphic.png?itok=hWCtTSrz)
Sara Giunti
![Person graphic](/sites/default/files/styles/square_desktop/public/2022-06/IFS-person-graphic.png?itok=hWCtTSrz)
Susanna Smets
Working Paper details
- DOI
- 10.1920/wp.ifs.2020.2020
- Publisher
- The IFS
Suggested citation
Augsburg, B et al. (2020). Labelled Loans and Human Capital Investments. London: The IFS. Available at: https://ifs.org.uk/publications/labelled-loans-and-human-capital-investments (accessed: 30 June 2024).
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