Despite the immense growth of microfinance as a poverty alleviation program, there is a significant gap in our understanding of whether and how access to financial services improves health and aging outcomes of the poor. Existing evaluations fail to carefully measure the impact of microfinance on health outcomes. For instance, no studies have assessed how access to credit influences important biomarkers and indicators of physical health such as blood pressure, height and weight. Furthermore, we have almost no knowledge of whether - and even in what direction - microfinance influences stress and psychological wellbeing. Finally, most existing evidence on health outcomes relies on subjective health measures such as self-reported health and hunger. While a handful of other studies have explored how microfinance may impact health, ours will be the first to combine an experimental research design with rigorous biomarkers to evaluate health effects of microfinance. Increasing evidence reveals that early childhood development leads to successful health and aging in adulthood Through conducting a large community-level randomized trial in India, the proposed project will provide causal evidence on the physical and mental health impacts of microfinance on adults and young children. This study exploits the expansion of a microfinance institution (MFI) in rural South India into 80 randomly selected sites (of a sample of 160) between 2010 and 2012. Randomization in MFI assignment eliminates selection bias among which villages have access to microfinance. The project includes a baseline survey of 6,200 households just before branch opening and a resurvey of these households two years later to assess health outcomes. Our surveys contain questions about health traditional in economics fieldwork as well as validated and objective health measures including both established and novel biomarkers rarely employed in studies of this nature.
The specific aims of this project are to assess the impact of microfinance access on (1) health outcomes related to nutrition and food security (including BMI and anemia), (2) physiological indicators of stress (cortisol levels) and psychological indicators of distress and (3) health expenditures and health care utilization.
The fourth aim i s to seek to provide evidence on the potential channels through which microfinance access influences health outcomes (increased income, smoothed consumption, risk sharing within social networks, or greater female empowerment). The project team is comprised of senior leaders in both economics and epidemiology with substantial experience in developing countries. Expected outcomes include causal evidence on the impact of microfinance on reliable measures of health and a ground-breaking longitudinal data set on health and aging outcomes for 6200 households made publicly available. We anticipate that the results will have an important positive impact on policy surrounding microfinance and public health in developing countries.
With more than 130-190 million microfinance borrowers and more than $43 billion dollars of loans outstanding worldwide, it is critical that we accurately value microfinance programs and design them to most effectively improve public health. However, the evidence on the health and aging impacts of this fast-growing development program remains limited. Our project will address this critical gap in understanding by using a rigorous experimental method to measure the impact of microfinance on health and aging, providing valuable information to policymakers for use in allocation of resources among development programs as well as in the design of health policy interventions.