Finance
 
Caste and credit: Not such a woeful tale?
Sunil Mitra Kumar , Ragupathy Venkatachalam
Posted on: 11 Sep 2017
Topics:   Caste , Finance

Caste is an enduring predictor of economic status in India and caste-based discrimination continues to pervade several spheres of life. What about rural lending? This column suggests that most caste-wise differences in access to loans reflect differences in application rates and only a smaller part are due to discrimination: backward caste-members are a lot less likely to apply for loans than the advantaged groups.
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Stock market participation in the aftermath of an accounting scandal
Renuka Sane
Posted on: 30 Aug 2017
Topics:   Finance
Tags:  

An emerging literature shows that exposure of fraud in the corporate sector leads to a fall in trust on part of households and decline in their stock market participation. Analysing data on daily investor account holdings from India, this column finds that contrary to international experience, an event such as the Satyam scandal did not have a big impact on investor activity.
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The economic and political consequences of India’s demonetisation
Abhijit Banerjee , Namrata Kala
Posted on: 26 Jul 2017

The ruling party at the centre won the Uttar Pradesh state election despite its demonetisation policy having some negative economic impacts on the Indian economy. By combining primary data from surveys of wholesale and retail traders, with secondary data on wholesale markets, this column seeks to analyse why this was so.
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Understanding livelihood resilience in Bihar
Surya Bhushan , K. V. Raju
Posted on: 16 Jun 2017
Topics:   Finance
Tags:   Bihar

This column develops a livelihood resilience index including three key components – bio-physical, economic, and social resources – and estimates the index for districts in the state of Bihar.
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Bank financing of stressed firms
Rajeswari Sengupta , Anjali Sharma
Posted on: 07 Jun 2017
Topics:   Finance

There is anecdotal evidence that banks in India have been extending credit to highly distressed firms. By delaying recognition of bad loans, banks may improve their own profitability in the short run, but in the long run, this has only exacerbated the non-performing asset crisis in the banking sector. This column provides preliminary empirical evidence that banks have indeed been throwing good money after bad.
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Hazards of farm loan waivers
Tanika Chakraborty , Aarti Gupta
Posted on: 23 May 2017

In theory, debt waivers are expected to induce the optimal level of effort from the debtor for loan repayment. However, repeated waivers may distort household expectations about credit contract enforcements in the future. This column analyses the effect of Uttar Pradesh’s state-level debt waiver programme – announced right after India’s nationwide Agricultural Debt Waiver and Debt Relief Scheme – on consumption and investment behaviour of households.
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Has regulatory intervention been effective in maintaining stability of Indian banks?
Mostak Ahamed , Sushanta Mallick
Posted on: 06 Feb 2017
Topics:   Finance

To address the challenges that Indian corporates faced in the early 2000s in meeting their debt-servicing obligations to banks/financial institutions, RBI introduced a corporate debt restructuring programme in 2002. This column finds that in the absence of a strong legal system, this out-of-court regulatory mechanism has indeed helped Indian banks remain stable, as there has been no bank failure in India unlike in other countries.
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How agricultural debt waiver impacts beneficiary households
Mrinal Mishra
Posted on: 02 Feb 2017
Topics:   Finance , Agriculture

How a large-scale and unanticipated debt-relief programme impacts beneficiary households is a question that has not been clearly answered by the existing literature. This column analyses the impact of India’s Agricultural Debt Waiver and Debt Relief Scheme of 2008. It finds that beneficiary households increase precautionary savings by increasing investment in jewellery as they anticipate higher credit constraints in the post-waiver period. Consumption levels remain unaffected.
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Kisan Credit Card programme: Expanded access to credit or expansion of credit?
Somdeep Chatterjee
Posted on: 03 Nov 2016
Topics:   Finance , Agriculture

Kisan Credit Card programme - a key reform in agricultural lending in India - has been operational for almost 20 years now. However, there is little empirical evidence of its impact on intended beneficiaries. This column finds that the programme has had significant positive impact on agricultural production and technology adoption. It is likely that the channel is enhanced borrowing ability of the already unconstrained, rather than expanded access to credit.
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Land and financial misallocation in India
Gilles Duranton , Ejaz Ghani , Arti Grover Goswami , William Kerr
Posted on: 20 Jul 2016

Optimising the allocation of factors of production – land, capital and labour - improves productivity. In India, where evidence suggests land is severely misallocated to inefficient manufacturing firms, access to financing is disproportionately tied to access to land. This column examines the link between the misallocation of land and access to capital through financial markets. A very strong positive correlation emerges between the two, consistent with the fact that land and buildings can provide strong collateral support for accessing finance from the credit market.
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