Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/242908 
Year of Publication: 
2021
Series/Report no.: 
IFS Working Paper No. W21/09
Publisher: 
Institute for Fiscal Studies (IFS), London
Abstract: 
Imperfect capital markets and commitment problems impede lumpy human capital investments. Labelled loans can alleviate both constraints, but little is known about their effectiveness in practice. We draw on a cluster randomized 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.
JEL: 
O16
D14
G41
I12
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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