MICROFINANCE PLUS HEALTH INSURANCE: IMPACT ON WOMEN’S BORROWER PRODUCTIVITY IN RURAL BANGLADESH
Abstract
Microfinance programs play important role in poverty alleviation particularly for the developing countries such as Bangladesh. Such programs are usually aimed at alleviating poverty through loans that will allow people, mostly women, to expand their businesses. Although microfinance has been successful for economic development, its influence on productivity particularly of female borrowers is still under explored. This paper examines the joint impact of micro credit and health insurance on productivity of women borrowers in rural Bangladesh. We contend that health insurance (when offered with microfinance) alleviates health obstacles to productivity, allows female borrowers to better contribute economically and unleashes their economic potential. Adopting a quasi-experimental design with Difference-in-Differences (DiD) estimation, we use longitudinal survey data from a sample of 1,000 female microfinance borrowers in rural Bangladesh who all were affiliated to highly similar health insurance programs but only a randomly selected half received this service. Our results indicate that health insurance not only has beneficial effects on the health of women, but has large implications for productivity in their micro-enterprises. Given the external benefits of health insurance, it is possible that adding a microinsurance component to the microfinance packages designed to increase productivity amongst women in under-resourced settings may be valuable. This study extends the theory of behavioral operations by incorporating health-related factors into economic decision-making models. The paper offers policy-relevant guidance for those seeking to develop comprehensive poverty alleviation programmes, particularly in rural areas. It also provides direction for future research on the interaction between financial and health interventions.
Keywords: Microfinance, Health Insurance, Women's Productivity, Rural Bangladesh, Behavioral Operations, Poverty Alleviation
