Replication data for: Bundling Health Insurance and Microfinance in India: There Cannot Be Adverse Selection If There Is No Demand

Principal Investigator(s): View help for Principal Investigator(s) Abhijit Banerjee; Esther Duflo; Richard Hornbeck

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Project Citation:

Banerjee, Abhijit, Duflo, Esther, and Hornbeck, Richard. Replication data for: Bundling Health Insurance and Microfinance in India: There Cannot Be Adverse Selection If There Is No Demand. Nashville, TN: American Economic Association [publisher], 2014. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-11. https://doi.org/10.3886/E112788V1

Project Description

Summary: 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, we evaluate the impact on loan renewal from mandating the purchase of actuarially-fair health insurance covering hospitalization and maternity expenses. Bundling loans with insurance led to a 16 percentage points (23 percent) increase in drop-out from microfinance, as many clients preferred to give up microfinance than pay higher interest rates and receive insurance. In a Pyrrhic victory, the total absence of demand for health insurance led to there being no adverse selection in insurance enrollment.

Scope of Project

JEL Classification:
      D82 Asymmetric and Private Information; Mechanism Design
      G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
      G22 Insurance; Insurance Companies; Actuarial Studies
      I13 Health Insurance, Public and Private
      O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration
      O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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Published Versions

V1 [2019-10-11]

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DDI 2.5

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