Article Text

Microcredit participation and child health: results from a cross-sectional study in Peru
1. H Moseson1,
3. L Fernald3
1. 1Department of Epidemiology & Biostatistics, University of California, San Francisco, California, USA
2. 2Division of General Medical Disciplines, Stanford University, Stanford, California, USA
3. 3Division of Community Health and Human Development, School of Public Health, University of California, Berkeley, California, USA
1. Correspondence to Heidi Moseson, Department of Epidemiology & Biostatistics, University of California, San Francisco, 185 Berry Street, Suite 5700, San Francisco, CA 94158, USA; heidi.moseson{at}ucsf.edu

## Abstract

Background Childhood malnutrition is a major consequence of poverty worldwide. Microcredit programmes—which offer small loans, financial literacy and social support to low-income individuals—are increasingly promoted as a way to improve the health of clients and their families. This study evaluates the hypothesis that longer participation in a microcredit programme is associated with improvements in the health of children of microcredit clients.

Methods Cross-sectional data were collected in February 2007 from 511 clients of a microcredit organisation in Peru and 596 of their children under 5 years of age. The primary predictor variable was length of participation in the microcredit programme. Outcome variables included height, weight, anaemia, household food security and parent-reported indicators of child health. Multivariate linear and logistic regressions assessed the association between the number of loan cycles and child health outcomes. Pathways through which microcredit may have influenced health outcomes were also explored via mediation analyses.

Results Longer participation in microcredit was associated with greater household food security and reduced likelihood of childhood anaemia. No significant associations were observed between microcredit participation and incidence of childhood illnesses or anthropometric indicators. Increased consumption of red meat may mediate the association between the number of loan cycles and food security, but not the association with anaemia.

Conclusions The effects of microcredit on the health of clients’ children are understudied. Exploratory findings from this analysis suggest that microcredit may positively influence child health, and that diet may play a causal role.

• Economic evaluation
• NUTRITION
• CHILD HEALTH
• EPIDEMIOLOGY
• INTERNATIONAL HLTH

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## Introduction

Childhood malnutrition is one of the most harmful health consequences of poverty and a great threat to public health worldwide.1 Children throughout low and middle-income countries (LMIC) suffer the consequences of malnutrition, which include death, impaired growth and impaired cognitive, language and motor skills.2 ,3 A variety of biomedical interventions to address malnutrition and underdevelopment have been tested with differing degrees of success.4 Other approaches address the broader socioeconomic determinants of health disparities by focusing on poverty alleviation and reductions in inequality.5

Microcredit programmes are one type of poverty alleviation intervention, offering small loans to low-income individuals who otherwise lack access to financial services.6 The hope is that clients (often women) invest these loans in their businesses to improve their families’ health and living conditions. Women often meet in groups, providing each other with social collateral to make up for their lack of physical collateral. Organisations that offer microcredit lending are often non-profits with a social mission; many integrate the loans with other programmes to promote financial literacy, women's empowerment or health.

Microcredit is often promoted as an intervention to improve socioeconomic status and health.7 ,8 A review of the literature reveals that most studies focus on the health of clients themselves rather than their children. Microcredit participation has been associated with higher haemoglobin levels and food security,9 ,10 and increased use of sanitary latrines and contraception,11 yet not all results have been positive. For example, studies have suggested both increased and decreased healthcare utilisation among microcredit clients,12 ,13 and inconsistent effects on mental health.14–16 Given that many communities are saturated with microcredit lenders,17 randomised controlled trials are difficult to conduct: loan take-up is often higher in the control group, which may lead to an underestimate of the effects of the loans.18 One study to employ such a design involved the randomisation of loans to slums in India, with results demonstrating no impact on health, sanitation or food expenditures.18 Further, the structure of microcredit interventions varies significantly across programmes, making it difficult to make generalisations about programme impact. Several review articles on the effects of microcredit programmes on economic, health and social outcomes find that the quantitative evidence that exists is sparse and inconclusive.19–22

The few studies on health outcomes among the children of microcredit clients suffer from similar limitations. One study found that children of clients who had access to loans had greater height-for-age than children of clients with limited access,10 while an evaluation of a microcredit programme in Bolivia with an educational intervention found that participation was associated with improvements in weight-for-age among programme children, compared with children of non-participants.23 A credit-with-education programme in Ghana resulted in higher height-for-age among 1-year-old children of participants compared with children of future participants.24 These last two studies did not distinguish whether the outcomes were a result of the microcredit loans or the educational intervention.

Several pathways may link microcredit with child health. Increased income from loans may lead to greater spending on health, food, sanitation or housing.14 In particular, increased income may allow for purchase of higher priced foods with higher nutrient density, such as red meat, a food that is associated with higher intake of calories, iron, zinc and vitamin B12.25 Another pathway suggests that clients’ heightened empowerment as a result of participation in microcredit programmes leads them to adopt positive health behaviours.26 ,27 For example, women's increased control of their finances is believed to augment their decision-making power on issues such as household spending and contraceptive use. A third pathway proposes that the supplemental health education offered in conjunction with microcredit loans may lead to positive changes in client behaviour.28–30 A final pathway involves well-known mechanisms through which improvements in maternal health bring about improvements in child health31; a prior study of this sample found that microcredit participation was improved with reductions in maternal anaemia, such that this pathway may be important for children in this study.9 Conversely, since women participating in microcredit programmes typically continue to be responsible for housework in addition to their responsibilities in running a business and attending loan group meetings, this dual burden may reduce the time available for childcare or personal healthcare, leading to worsened family health outcomes.32 ,33

Despite the paucity of rigorous studies on the association between microcredit participation and child health, over 3000 microcredit programmes exist around the world.34 This study aims to explore the impact of microcredit participation by examining the associations between child health and length of participation among clients of Prisma, a microcredit programme in Peru. Prisma provides loans through a group-lending model, with interest rates typical of those in other LMIC. Given the challenges discussed above in implementing randomised controlled studies of this type of intervention, our study relies on a cross-sectional design, aiming to test preliminary hypotheses about the association between microcredit and child health to inform future longitudinal research. We hypothesise that the additional household resources gained by participating in a microcredit programme for longer amounts of time, as well as improvements in parental health and empowerment, are associated with improved health outcomes among children of clients. The study adds to the existing literature by exploring potential pathways through which this poverty alleviation intervention may influence child health.

## Methods

### Measures

The primary independent variable was length of participation in Prisma's microcredit programme, as measured by the number of loan cycles completed by the client. The duration of each loan cycle is 6 months. This variable was transformed into a categorical variable to capture non-linearity: 0 loan cycles (reference group), 1 loan cycle, 2 loan cycles and 3–9 loan cycles. Clients with 0 loan cycles represent those individuals who are the newest members of Prisma, with less than 6 months of exposure to the programme. Those with 3–9 cycles (ie, 18–54 months) are the longest standing members. Clients who had completed 3–9 loan cycles were grouped together to reflect their shared, previously demonstrated ability to repeatedly repay loans. Using the duration of participation (measured in loan cycles) is a method that has been used in previous studies to capture the ‘dose–response’ association between exposure to the microcredit programme and health outcomes.9 ,14 Non-programme participants were explicitly not selected as a control group because they may differ from those individuals who choose to enrol in the programme in important ways related to motivation, entrepreneurship and other unmeasured factors.38

The questionnaire included questions about demographics and socioeconomic status. Child age was included as a dichotomous variable (above and below 2 years of age). This was to capture potential non-linear effects, given that early childhood represents a critical developmental window during which environmental changes may have more of an effect on child health.39 Adult age was included as a continuous variable. Education was included as a categorical variable reflecting completion of primary school or less (reference group), some secondary education, complete secondary education and some post-secondary education. Clients were asked about household assets—such as refrigerators, cars and washing machines—characteristics of their home—such as construction materials—and whether their home had electricity. These measures have been shown to be valid indicators of poverty across regional and national samples.40 For each group of household indicators—assets, housing and electricity—a principal components variable was constructed as a measure of socioeconomic status. This method has been used in previous studies to measure relative poverty among households in developing countries.41 ,42 We modelled household socioeconomic status using household assets because of established methodological issues with accurate measurement of household income via self-report.43

We next selected anthropometric measures that have been shown to be important markers of child poverty.44 These included length-for-age and weight-for-age Z-scores, calculated using reference standards of the WHO.45 The length of children under 2 years was measured while they were in the supine position. Blood haemoglobin levels were obtained using the HemoCue Hb 201+ System (HemoCue Inc). Anaemia was defined as a haemoglobin level under 11 mg/dL.46 Haemoglobin was not adjusted for altitude, as Pucallpa lies at only 200 m above sea level.46

Clients were asked about their children's health in the last month, including the number of respiratory infections and diarrhoeal episodes. A nine-item index adapted from the US Household Food Security Survey Module was used to measure food insecurity, which captures the availability and affordability of food in the household in the past month, specifically focusing on insufficient quantity and periods of hunger. A score above 2 indicates household insecurity.47 This version has been validated previously in developing countries.48 We also asked parents about their children's dietary consumption during the past month using a Food Frequency Questionnaire (FFQ) that was modified to include common local foods. Consumption of red meat was measured by asking about the total number of times a child consumed red meat in the past month. We selected red meat for a food security mediation analysis because of its status as a higher cost luxury food, which is most likely more attainable as household income rises; we selected it for an anaemia mediation analysis because it is iron-rich, and iron is known to affect haemoglobin levels.49 We also asked about household water sources and whether water was properly treated, defined as having been commercially bottled, boiled or treated with chlorine or lye. For anthropometric measures and survey questions, validity testing was conducted prior to survey launch to ensure inter-rater and intra-rater reliability.

Some outcome measurements are missing (0–8% missing, depending on the outcome), seemingly randomly, due to parental refusal, insufficient time or surveyor error. We include only those children with data on relevant outcomes.

### Data analysis

Survey staff double-entered data using CSPro 3.3 (US Census Bureau, Population Division, Washington DC, USA). Analyses were conducted using Stata IC 13 (College Station, Texas, USA).

We used a cross-sectional design to investigate the association between clients’ length of participation in the microcredit programme and health outcomes among their children. Mean values and frequencies were calculated for client and child sociodemographic characteristics, as well as for health outcomes, overall and by number of loan cycles completed. Differences in mean values between loan groups were assessed with one-way analysis of variance or independent t tests. We used multivariate linear and logistic regressions to explore the association between loan cycles and child health while controlling for the influence of possible confounders. Regressions control for age and gender of the child and client, educational and marital status of the client, and household wealth, with errors clustered by household. We also constructed two interaction terms: number of loan cycles by child age and number of loan cycles by child gender. We were unable to explore differences by client gender because of the small number of male clients in our sample (15%). We consider both main terms and interaction terms with a p value less than 0.05 to be statistically significant.50 Hausman testing indicated that random effects models should be used. Regressions involving food insecurity were only conducted on first-born children for whom we have measures (n=493), as all children in the same household have the same food insecurity score.

We also conducted a mediation analysis to measure the extent to which increased red meat consumption may mediate the relationship between loan cycles and improved food security, and between loan cycles and reduced anaemia. We used seemingly unrelated regression51 to compute indirect and direct effect coefficients for loan cycles and red meat in relation to food security score, and then calculated the proportion of the total effect of loan cycles on the food security score that was mediated (indirect effect) through red meat consumption.52 ,53 To account for the binary nature of anaemia and the logistic model used, we first rescaled the coefficients by the SDs of the predictor and outcome variables and then applied the product of coefficients approach.54 These calculations assume no unmeasured confounders of the mediator–outcome relationship, no causal intermediaries and no interaction between the exposure and mediator.55–57 The results from the binary mediation analysis for anaemia must be cautiously interpreted given the non-collapsibility property of the OR. We calculated 95% CIs for the mediation coefficients using bootstrap SEs, a non-parametric method based on resampling, with 500 repetitions using the bootstrap command in Stata V.13.

## Results

### Sample characteristics

Seventy-five per cent of clients completed a secondary school education (table 1) and a mean of 2.2 loan cycles (range 0–9). Clients who had participated for a greater number of loan cycles were slightly older and had greater household assets (0.1 vs −0.3, p=0.01).

Table 1

Demographic characteristics of clients and their children, by loan cycles completed

Children's ages ranged from 0 to 5 years (66% between 2 and 5 years), and 85% were first-born children (table 1). The prevalence of anaemia and average height-for and weight-for age in this sample is comparable to those in Peru more generally, suggesting chronic malnutrition.58 ,59 There were no meaningful differences in demographic characteristics of children across the number of loan cycles (table 2).

Table 2

Health outcomes of client children, by number of loan cycles completed

### Multivariate regressions

In adjusted models (table 3), each additional loan cycle (6 months of programme exposure) was associated with 11% lower odds of anaemia as compared with children of clients who had completed one fewer loan cycle (OR=0.89, 95% CI 0.80 to 1.01, p=0.06). We found no evidence that either child age or gender modified the relationship between the number of loan cycles and anaemia.

Table 3

Health outcomes among children of microcredit participants with number of loan cycles as predictor

Each additional loan cycle was associated with a decrease of 15% in the food insecurity score (β=−0.15, 95% CI −0.26 to −0.04) in adjusted models, implying an improvement in food security. We found no evidence for effect measure modification by child age or gender. We also found no evidence of an association between length of participation in a microcredit programme and child height, weight or recent illness.

Completion of more loan cycles was borderline associated with an increase in a child's mean red meat consumption, with the most striking difference between children whose families have completed one loan cycle versus none (p=0.06; table 4). Children in food-secure households consumed significantly more red meat servings per day on average than did those in food-insecure households (mean difference=0.06, p=0.04). A mediation analysis quantified this relationship, identifying that approximately 9% (95% CI 0% to 25%) of the association between the number of loan cycles completed and household food insecurity is explained by children's red meat consumption. We observed no difference in average red meat consumption between anaemic and non-anaemic children (table 4), and a mediation analysis confirmed that red meat consumption did not mediate the relationship between loan cycles and anaemia (95%CI −0.08 to 0.05). No difference in access to clean water was seen across loan groups or by anaemic status.

Table 4

Analysis of pathways through which microcredit loans may influence health

## Discussion

We hypothesised that longer participation in a microcredit programme would be associated with better health outcomes among clients’ children. We found that longer participation was associated with a marginally significantly lower likelihood of anaemia among children and a significantly greater household food security; the food security findings appear to operate partially via an increase in red meat consumption. We found no evidence for an association between the number of loan cycles completed and child height, weight or incidence of other illnesses, and no difference in outcomes by child age or gender.

Other studies have also found that participation in a microcredit programme is associated with improvements in household food security,10 ,23 although they did not identify factors that contributed to this improvement. We explored a possible pathway by which microcredit may improve household food security, through the increased consumption of red meat. As the food security questionnaire is a subjective measure of the respondent's perception of food access and availability, and as red meat consumption often symbolises wealth in many cultures,60 a respondent may report improved perceptions of food security based on increased consumption of red meat.

Our finding of improved anaemia levels among clients’ children is similar to a finding in a separate study of women in our sample, in which we found that haemoglobin levels were higher among female clients with longer participation in the programme.9 While we do not find that this is due to the increase in red meat consumption, it may be that the children had greater access to other categories of iron-rich foods not addressed in this study, such as leafy green vegetables or legumes. We also did not find that this relationship was mediated by access to clean water that may have improved health status by reducing gastrointestinal illnesses. It is also possible that higher incomes lead to greater household investments in malaria treatment and prevention, which reduce the burden of anaemia, although this is not a pathway we examined. Intra-household distribution of food may also have been altered given the improved food security,61 such that children may have received a larger share of nutritional resources with a subsequent improvement in anaemia.

Consistent with the few previous studies, our study finds no association between programme participation and other anthropometric or patient-reported health outcomes in children.23 ,24 ,62 This may be because participation in microcredit leads to a different, but not necessarily better distribution of household resources. A household may feel more able to buy more food and thus improve food security, but these dietary changes may not be sufficient to change anthropometric measures. Our analyses of access to clean water seem to confirm this: longer participation in the microcredit programme is not associated with improvements in the water supply that could have reduced diarrhoeal illnesses. This suggests that public health practitioners and socially conscious microcredit organisations may need to look beyond a ‘food-first’ bias, instead focusing on multi-sectoral infrastructural changes to address malnutrition and child health.63

Our study has significant implications for public health activities to improve child health and nutrition. Health researchers have long acknowledged that addressing social and economic factors is critical in alleviating health disparities,5 and some have suggested that microcredit may be an appropriate tool to address these factors in order to attain the Millennium Development Goals.6 Even though economic interventions such as microcredit target the more distal factors rather than those more proximal to a child's immediate environment, our study supports the idea that they should be integrated into other public health interventions to achieve these aims.

There are several limitations to this study. The use of a cross-sectional design leaves us unable to establish causality (or to reject reverse causality) or track individual changes over time. Further, our use of new members as the control group raises several issues. New clients may fundamentally differ from long-term clients in terms of stage of family life and eagerness to take up the intervention, depending on how the programme was rolled out. Thus, our results may be biased according to these unmeasured differences. One major strength of this approach, however, is that both our exposed and control groups are comparable with respect to the qualities that lead a person to join a microcredit organisation. Another limitation involves the use of a 1-month recall for dietary intake, which may lead to measurement error in the FFQ due to recall bias. A final limitation is that microcredit programmes are known to differ substantially from one another in terms of structure and content. These differences complicate efforts to make valid comparisons across programmes, which limits the generalisability of our findings to those programmes with similar structure. Moreover, given that microcredit organisations differ in terms of the social contexts in which they operate, the results should be applied with caution to programmes operating in other international settings. For example, added income may not be as beneficial for child health and nutrition in a community in which the individuals still lack access to healthcare, nutritious food and other resources.

## Conclusions

In this study among children of microcredit participants in Peru, we evaluate an intervention that may improve child health by addressing poverty, one of the leading socioeconomic determinants of health. Our results suggest that participation in this microcredit programme is associated with greater household food security and lower levels of anaemia among clients’ children. We found that increased consumption of red meat may partially explain this finding. Further research should attempt to elucidate more exactly the mechanisms through which microcredit participation may influence these child health outcomes, and how and when we can intervene to make sure that similar economic interventions effectively improve the health and well-being of children.

### What is already known on this subject

• Only a handful of studies have explored the influence of microcredit participation on the health of clients’ children, and they suggest that there may be a positive link between the two. No studies, however, have quantitatively measured which mechanisms of microcredit participation may influence the health of clients’ children.

### What does this study add

• This study finds that longer participation in a microcredit programme is associated with improved household food security and reduced childhood anaemia. Specifically, findings suggest that dietary changes, enabled by microcredit loans, may explain these beneficial health outcomes in children of microcredit clients in Peru.

## Acknowledgments

The authors would like to thank Dean Karlan, Maureen Lahiff, Silvia Robles, Miguel Almunia and Tania Alfonso for their assistance with this study, as well as Prisma, the surveyors and the study subjects for their participation. They also acknowledge the reviewers for their valuable contributions.

View Abstract

## Footnotes

• Contributors HM and RH developed the research question and analysis plan, with input from LF. HM conducted all analyses and drafted the paper, with guidance and input from RH and LF at each stage. All authors reviewed and approved the final draft.

• Funding This project was supported financially by the American Women's Hospitals Services, the Bixby Program at the University of California Berkeley (UCB), the Center for Latin American Studies at UCB, the Dean's Summer Fellowship at the University of California San Francisco (UCSF), the Human Rights Center at UCB, Innovations for Poverty Action, the Interdisciplinary MPH Program at the UCB School of Public Health, the Rainer Fund, the UCSF-UCB Joint Medical Program, and the National Institute for General Medical Sciences (NIGMS) Initiative for Maximizing Student Development Fellowship Grant number R25 GM56847.

• Competing interests None.

• Patient consent Obtained.

• Ethics approval University of California, Berkeley IRB.

• Provenance and peer review Not commissioned; externally peer reviewed.

• Data sharing statement De-identified from the study may be made available to interested parties upon review of any requests, as determined by the study PIs.