Microfinance institutions have started to bundle their basic loans with other financial services, such as health insurance. Using a randomized control trial in Karnataka, India, this project evaluates the impact of mandating the purchase of actuarially-fair health insurance covering hospitalization and maternity expenses on health and financial outcomes.
As bundling loans with insurance led to a decline in the renewal of microfinance loans, with many clients preferring to give up microfinance than to pay higher interest rates and receive insurance, we also examine the effects of non-renewal.
External Link(s)
Citation
Banerjee, Abhijit, Esther Duflo and Richard Hornbeck. 2018. "Economic and Health Impacts of Hospitalization and Maternity Insurance in India." AEA RCT Registry. April 10. https://doi.org/10.1257/rct.330-3.0.
Loan renewal, insurance usage, household health and financial outcomes.
Primary Outcomes (explanation)
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
In June 2007, SKS Microfinance, which at the time was the largest MFI in India, began to require clients in 101 villages to purchase health insurance at the time of renewing loans. The 101 villages were selected randomly from a list of 201 candidate villages. Clients in the remaining 100 villages were not offered or required to purchase health insurance from SKS. The random selection of villages into the treatment group allows for the identification of causal effects of the insurance requirement by comparing outcomes between the selected and not selected.
We collected detailed baseline data on a random sample of SKS client households in treatment and control villages prior to the intervention. This baseline survey was complemented by a survey of major health events among clients during the intervention and an endline survey after the intervention ended and the purchase of insurance was no longer mandatory. In addition to survey data, we received detailed administrative data from SKS on clients' loan history and health insurance usage.
Experimental Design Details
Randomization Method
Randomization done in office by computer program on Stata.
Randomization Unit
Village
Was the treatment clustered?
Yes
Sample size: planned number of clusters
Approximately 7,000 households in 201 village clusters.
Sample size: planned number of observations
Approximately 36,000 adults in 7,000 households.
Sample size (or number of clusters) by treatment arms
101 villages treatment, 100 villages control.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)