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The Indian Household Finance Landscape

54 Pages Posted: 15 Feb 2017  

Cristian Badarinza

National University of Singapore (NUS)

Vimal Balasubramaniam

Warwick Business School

Tarun Ramadorai

Imperial College London; Centre for Economic Policy Research (CEPR)

Date Written: June 18, 2016

Abstract

Using the most recent wave of the AIDIS data, we describe and attempt to explain several important features of Indian household balance sheets. When compared with data on households in a range of developed and emerging economies, Indian households on average tend to hold a high fraction of non-financial assets with particularly high relative weights in real estate and gold, hold negligible retirement assets, and non-institutional debt is their primary source of debt. These propensities are also evident along the lifecycle, as well as at almost all points in the wealth distribution, and correlated with location (rural vs. urban), education, and family composition. Controlling for demographics, substantial state-level variation remains in asset and debt holdings which is related to state-level factors including historical inflation volatility, the share of the population in public sector employment, and the density of bank branch networks. We discuss the potential implications of these results for policy.

Keywords: India, savings, households, inflation, experience, gold, real estate

JEL Classification: D10, G11, O16

Suggested Citation

Badarinza, Cristian and Balasubramaniam, Vimal and Ramadorai, Tarun, The Indian Household Finance Landscape (June 18, 2016). Available at SSRN: https://ssrn.com/abstract=2797680

Cristian Badarinza

National University of Singapore (NUS) ( email )

Bukit Timah Road 469 G
Singapore, 117591
Singapore

Vimal Balasubramaniam

Warwick Business School ( email )

Gibbet Hill Rd
Coventry, CV4 7AL
Great Britain

Tarun Ramadorai (Contact Author)

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

HOME PAGE: http://www.tarunramadorai.com

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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