Impact of Credit on Education and Healthcare Spending in RuralPakistan

It is to access that the microcredit has a positive impact oneducation and healthcare spending of the borrowed households iscontroversial in developing countries literature or not. This studyreports evidence, from Pakistan for this debate, while utilising datafrom PPHS- 2010 (Pakistan Panel Household Survey). Propensity scorematching (PSM) has been used to investigate the impact of householdcredit on healthcare and education spending by the poor. In addition tomatching statistically identical borrowers with non-borrowers, themethod controls for household pre-treatment assets and income. These maybe correlated with unobservable factors affecting credit participationas well as outcomes of interest. The estimates from binary as well asmultiple ordered treatment effect show insignificant impact of borrowingon education and significant and positive impact on healthcare spending.JEL Classification: D13, C14 Keyword: Matching; Household Credit;Per-capita Income; Education and Healthcare Spending