Regional financial disparity in India: can it be measured?

Abstract

In this study, we examine disparities in financial development at the regional level in India. The major research questions of the study are: how do we measure the level of financial development at the sub-national level? How unequal is financial development across the states? Does it vary by ownership of financial institutions? To explore these research questions, our study develops a composite banking development index at the sub-national level for three different bank groups – public, private and foreign for 25 Indian states covering 1996–2015. Our findings suggest that despite reforms, banking development is significantly higher in the leading high income and more developed regions compared to lagging ones. Furthermore, we find that all bank groups including public banks are concentrated more in the developed regions. Overall, over the years the position of top three and bottom three states in the aggregate banking index have remained unchanged reflecting lop-sidedness of regional development. We also note improvement in the ranking of some north-eastern states during the period 2009–15.

What influences village-level access to a bank branch? Evidence from India

“…In order to design effective policies on financial inclusion, it is critical to understand the disparity in financial access at a more granular level. Few recent papers have examined this subject in the Indian context (Ghosh, 2012;Arora and Anand, 2021;Zhang et al, 2021), although up to the state level. We contribute to this line of research by examining this issue at the village level.…”

“…Authors show that a higher population, lower infant mortality and implementation of PMJDY lead to a higher number of branches. Similarly, based on state-level analysis from 1996 to 2015, Arora and Anand (2021) show that banking development is significantly higher in high-income and better-developed states. All these papers explore bank branch availability at the state level.…”

Divergence before the division: the colonial origins of separate development paths in Korea

“…Hoover and Fisher, 1949; North, 1955; Ohlin, 1935). And it has become particularly relevant for the study of present-day emerging economies (Arora and Anand, 2021, for India; Nguyen, 2020, on Vietnam). For our case, at the beginning of the observational period (1911) results obtained from the measurement developed by Sun and Ng (2000) show small differences in the structures of economic activity between North and South Korea.…”