The Impact of Access to Microfinance on Mental Health
Date
2014
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Haverford College. Department of Economics
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Thesis
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Award
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eng
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Open Access
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Abstract
Microfinance has reached over 175 million impoverished families worldwide (Microcredit Summit), offering under-banked populations the opportunity to access financial tools. This access to finance provides clients an opportunity to improve their financial condition; however, the impacts of microfinance often extend beyond a client's wallet. This study analyzes the extent to which access to finance impacts mental health indicators, including life satisfaction, stress, depression, and optimism. Financial access is measured by household use of various financial products, such as loans, savings, and insurance, as well as by the different modes in which these products are offered, e.g., group liability lending versus individual loans. Data was collected in the impoverished Udaipur district of Rajasthan, India between 2002 and 2009. The data consists of both individual and household surveys that were administered in two distinct waves, creating a panel data set. Using fixed-effects OLS regressions, the results show that having an outstanding loan decreases an individual's life satisfaction and increases stress. Outstanding loans are the only measure of financial access to impact mental health. Mental health indicators of depression symptoms and optimism appear unaffected by access to finance. The results indicate a limited impact of access to finance on the emotional health and status of microfinance clients.