Monday, December 4
Fri
Oct
06

Rural Banks Can Reduce Poverty: Experimental Evidence from 870 Indian Villages

Speakers:

Giorgia BarboniUniversity of Warwick

 
06
October,
2023
03:30 PM to 05:00 PM (IST)

Abstract:-

We evaluate an at-scale experiment that randomized branch placement by a private-sector bank across 870 South Indian villages. Within two years of branch opening, one in three households in treated villages had taken a formal loan and roughly a quarter had taken up an insurance or savings product. Reliance on more expensive informal loans fell — we observe a 10% reduction in informal borrowing in treatment areas relative to control. Greater engagement with formal finance improved individual and aggregate well-being: Relative to control villages, poverty rates in treatment villages are 8% lower two years after bank opening. Alongside, occupational diversification and village economic activity rise: households in treated villages are 15% more likely to have a member working in non-agriculture self-employment, have 20% higher business income, and 6% higher wage income. The net effect of higher formal debt and lower poverty on women’s mental health and wellbeing is positive: stress biomarkers fall significantly in treatment villages relative to control while women’s control over resources improves significantly. Our evidence is consistent with a model of entrepreneurship in which access to cheaper formal credit increased village-wide labor demand and increases overall welfare.

To register for this event please visit the following URL: https://us06web.zoom.us/meeting/register/tZctd-2orzouGtAL9Y10JPo0JKLD0ZFP3ahs →

Date & Time

06-10-2023
03:30 PM
to 05:00 PM (IST)

Location

Anywhere

Event Type

IEG Seminar

Event Category

Past event

Speaker(s)

Giorgia Barboni

University of Warwick

Moderator(s)

Sandhya Garg

Assistant Professor