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Int. J. Financial Stud. 2018, 6(1), 16;

Microfinance and the Decision to Invest in Children’s Education

Lubin School of Business, Pace University, 1 Pace Plaza, New York, NY 10038, USA
The work in this paper was done with the assistance of students in my India Field Study course, which I taught in Fall 2015 with a visit to India in January 2016. The names of the students, who participated in the course are: Caroline A Alcindor, Ryan E Barone, Ornella S Beresi-Greif, Sergio F Borjas, Frantzceska Cheron, Andrew P Crocitto, Ronit R Desai, Gabriella D Ferrara, Ashley A Heller, Genesis Y Jaya Ron, Jozef M Lampa, Zhi Hong Mao, Tiffany N Quinto, Morgan Steadwell, Hantze M Toureau and Anastasia Vasilakos.
Received: 5 January 2018 / Revised: 23 January 2018 / Accepted: 26 January 2018 / Published: 1 February 2018
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Although one of the primary objectives of microfinance has been the reduction of poverty through the provision of credit for income-generating purposes, evidence of its impact on poverty has been mixed. Even if there is no direct impact of microfinance, there may be an indirect positive impact through the effect of microcredit availability on families’ decisions to invest in their children’s education. In this paper, I describe a study undertaken to gauge the impact of microcredit availability on education expenditures for children of clients of a South Indian microfinance institution. I first look at some determinants of the demand for education and then go on to consider what we know about how microcredit affects this demand. I find that microcredit has an impact on the demand for education as mediated by wealth effects and status effects, i.e., microloans increase spending on education the greater the wealth and the greater the social status of the family. Focus group interviews suggest that the impact of microcredit on the demand for education comes mainly from the greater access to financial resources and, to a lesser degree, from an accompanying appreciation of the value of education. View Full-Text
Keywords: microfinance; education; human capital; social status; India microfinance; education; human capital; social status; India
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).

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Viswanath, P. Microfinance and the Decision to Invest in Children’s Education. Int. J. Financial Stud. 2018, 6, 16.

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Int. J. Financial Stud. EISSN 2227-7072 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
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