straints find larger effects that we do: for example, Pickering et al. [2015] find a 30 percentage point (pp) increase following an intense CLTS program in Mali, while Clasen et al. [2014] and Patil et al., 2014 achieve increases of 28 pp and 19 pp using CLTS-like activities combined with subsidies in Orissa and Madhya Pradesh, India respectively. On the other hand, Guiteras et al., 2015 found no significant effects of a CLTS-inspired intervention in Bangladesh, unless it was paired with subsidy provision in which case the uptake was 7 percentage points. Similarly, Cameron et al., 2013 and Abramovsky et al., 2018 find small or no average impacts of CLTS interventions in Indonesia and Nigeria respectively.

The rest of the paper is structured as follows. The next section describes the context of the study and the sanitation loan product. Section 3 discusses the experimental design, and data. Thereafter, Section 4 presents a theoretical model outlining how the sanitation loan intervention influences household borrowing and investment decisions. Section 5 outlines our empirical strategy, and is followed by a presentation of our empirical findings in Section 6. Section 7 concludes.

# **2 Context and intervention**

## **2.1 Context**

Our study concentrates on 5 blocks of 2 districts, Latur and Nanded, in the South-Eastern area of Maharashtra, India (see Figure 1). Maharashtra, with its capital Mumbai, is one of the largest Indian states, counting approximately 100 million people living in almost 44,000 villages (GoI, 2011a). While this is the second richest state in the country in terms of per capita income, incidence of poverty remains close to the national average, implying severe inequalities within the state (GoM, 2012). This is exemplified by the 2011 Human Development Index, which averaged 0.752 for the state, different districts however ranging from 0.604 to 0.841, with Latur and Nanded falling among the low-ranked districts with an HDI of 0.663 and 0.657, respectively (GoM, 2018). Other indicators confirm that Latur and Nanded are among the most deprived parts of Maharashtra. The total literacy rate in 2011 was 76.9 percent in Nanded and 79 percent in Latur, both below the state-level average of 82.9. Agriculture is the main economic activity in this area. In 2011, the percentage of people engaged in the primary sector was 72.3 percent in Nanded (GoI, 2011c) and 71.5 percent in Latur (GoI, 2011b).

We show in Online Appendix TableOA-A.1 some key statistics comparing our study sample, i.e. the districts of Latur and Nanded, to rural Maharashtra and rural India using data from the most recent District Level Household survey 4 (DLHS-4), collected in 2012-13. We show that the study sample compares well to the study districts (and rural India in general) in terms of caste composition and religion (with a slightly larger percentage of muslims), but should otherwise be considered a selecion of the poorer part of the population. Households in our sample are more likely to own a BPL card, be female headed, and are less likely to own land – compared to the population of the study districts, rural Maharashtra and rural India.

session that relies on shame and disgust.

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