The Determinants of Access to Informal Credits in India: An Application of Quantiles via Moments Method

Mishra, Aswini Kumar; Bhardwaj, Vedant

doi:10.1007/s40953-021-00255-x

Cited by 2 publications

(1 citation statement)

References 30 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…These papers, however, do not focus on the long run effects of increasing credit accessibility at a larger scale, while we study the persistence in the impact of these measures. Another section of the literature has documented how, after the policy implementation, the formal credit supply increased, although not with the same intensity across India (Gupta, 2019;Mishra & Bhardwaj, 2022). We contribute to this literature by constructing a fuzzy Regression Discontinuity Design, where credit supply shocks shape the composition of the credit market.…”

Section: Literature Reviewmentioning

confidence: 99%

Financial Accessibility and Interest Rates in the Informal Credit Market in India

Briones,

Chiseliov,

Gushchin

et al. 2024

Preprint

View full text Add to dashboard Cite

This paper studies the impact of new bank branch openings on the lending rates in the informal credit market in India. The implementation of a bank branch expansion policy in India after 2005 is used as exogenous variation in a Regression Discontinuity Design (RDD). The response of informal interest rates is compared between treated and control districts. We find that, after 5 years of the imple- mentation of the policy, the annual lending rates in the informal credit market fell by about 24%. To identify the channels, we attempt to decompose the effects of multiple factors and find that competition between the banks and informal lenders would explain a significant share of this fall. Thus, we conclude that opening of new bank branches poses a strong threat to the market power of the moneylenders which drives down the interest rates.

show abstract

Section: Literature Reviewmentioning

confidence: 99%