Helping Schools Survive: Experimental Evidence on the Impact of Financial and Educational Support to Private Schools
Private schools provide affordable education in low-income countries. Yet, they often face higher closure rates, leading to disruption for students. We provide experimental evidence from Pakistan that shows financial and educational support substantially aids school survival. Rural private schools expressing an interest in financing were randomized into receiving loan offers and/or access to educational support products and services (ESPS). Both were provided at market-rates and had reasonable take-up rates of 36 percent and 27 percent respectively. Repayment rates were high making loans and ESPS commercially viable products to offer. Furthermore, we find that receiving either a loan or ESPS has a huge impact on school survival, effectively eliminating school closures entirely relative to the control group, where almost a third of schools had closed over a 4 year period. We find little evidence of complementarity between the two treatments. Further examination reveals heterogeneity by both school and treatment type. Both treatments primarily work by lowering closure rates for schools that had lower test scores at baseline. However, baseline school size reveals an interesting difference: while ESPS reduces closure rates for both small and large schools, loans increase closure rates for small schools, while reducing them for larger schools. This is consistent with financing, a more fungible service, allowing smaller school owners the opportunity to use the funding to exit entirely from schooling likely to pursue an alternative opportunity. Together our results show how school survival is constrained by a lack of access to financial and educational support, and highlight how the fungibility of the support matters, underscoring the importance and welfare implications of designing and targeting entrepreneurial support.
Andrabi, T., Das, J., Khwaja, A.I. and Özyurtanon, S. 2023. Helping Schools Survive: Experimental Evidence on the Impact of Financial and Educational Support to Private Schools. RISE Working Paper Series. 23/127. https://doi.org/10.35489/BSG-RISE-WP_2023/127