Helping Schools Survive: Experimental evidence on the impact of Financial and Educational Support to Private Schools

Our study involved two key interventions: loans and education support products.
We partnered with a microfinance institution, Tameer Microfinance Bank, to create and offer loan products. The loans were capped at Rs 150,000 (~ USD 1,460 at the time of offers) and were priced at the prevailing market interest rates. We offered two kinds of loan products: (i) risk based loan (RBL), which had a fixed interest rate based on the collateral type, and (ii) a revenue contingent loan (RCL), where the interest rate varied quarterly based on the last quarter's school revenue.

For schools in the EPS treatment arm, we organized 10 "melas", gatherings where we invited schools owners and EPS providers, so schools could explore and arrange for purchase of the EPS products. EPS providers included organizations offering teacher training, low-cost textbooks, e-learning tools, IT-based instructional materials, and financial management training.

2015-02-01

2017-03-01

Our primary outcome of interest include take up rates for both loan and EPS products, returns on the products, and school closure rates measured at 1, 2, and 4 years following the intervention.

We conducted a randomized controlled trial involving 815 schools to evaluate the effectiveness of improving access to financial products and educational support services (EPS). We partnered with a microfinance institution to design and offer loan products tailored to school needs. Additionally, we organized EPS trade fairs (melas), where school owners could explore and purchase educational materials and services.

In 2015, we identified and approached all private schools in three districts of Punjab: Faisalabad, Gujranwala, and Sialkot. Schools that demonstrated financing needs and expressed interest in obtaining a loan were screened for inclusion in the study. After follow-up phone calls to confirm financing interest and obtain consent, our final sample comprised 815 schools: 283 in Faisalabad, 236 in Gujranwala, and 296 in Sialkot.

Approximately 1.5 months after the initial screening, we administered an extended baseline survey and conducted the randomization process. The randomization was carried out through six public ballots in which all school owners participated in person. We implemented a two-stage randomization: first assigning schools to either the finance treatment or control group, and then to the EPS treatment or control group. Initially, two-thirds of schools were assigned to the finance treatment and one-third to control; in later ballots, this ratio shifted to four-fifths finance treatment and one-fifth control based on observed loan take-up rates and power calculations. The EPS treatment assignment remained evenly split (50/50) throughout. To minimize the time gap between baseline, randomization, and subsequent survey rounds, the randomization was conducted in three batches by district.

We conducted five follow-up surveys over the five-year period from 2015 to 2019. Three of these were extended surveys, spaced one to two years apart, collecting detailed information on school survival, revenues, funding sources, enrollment, test scores, local EPS market conditions, and selected aspects of the school owners’ households. The other two were shorter surveys conducted between the longer ones, focusing solely on enrollment, fees, and revenues. We also obtained administrative data on loan repayment from Tameer Microfinance Bank.

Six public ballots were conducted using a two-stage randomization: Schools were first assigned to Finance or Control (initially 2/3 vs. 1/3; later adjusted to 4/5 vs. 1/5). Then, schools were assigned to EPS or Control with equal probability (1/2 vs. 1/2).

Schools

Yes

815 schools

815 schools

Both finance and EPS treatments: 308 schools
Finance treatment only: 324 schools
EPS treatment only: 101 schools
Pure control (no treatment): 82 schools