Roads and Loans

69 Pages Posted: 16 Jul 2019

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

Abhiroop Mukherjee

Hong Kong University of Science & Technology (HKUST) - Department of Finance

S Lakshmi Naaraayanan

Hong Kong University of Science & Technology (HKUST) - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: May 2019

Abstract

Does financing respond to changes in productive opportunities even for the world's poor? We shed light by examining the response of private bank financing to a rural road-building program in India. The program prioritized roads for villages above explicit population thresholds, allowing us to use discontinuities in treatment probability for identification. We find large financing responses - odds of a villager getting a loan is twice as high, and the average loan amounts are about 50% higher - for villages just above the threshold compared to those below. Benefits seem to flow disproportionately to those traditionally disadvantaged in rural societies.

Keywords: Finance and growth, Infrastructure development and finance, Rural lending

JEL Classification: G21, O16

Suggested Citation

Agarwal, Sumit and Mukherjee, Abhiroop and Naaraayanan, S Lakshmi, Roads and Loans (May 2019). HKUST IEMS Working Paper No. 2019-61 . Available at SSRN: https://ssrn.com/abstract=3420546 or http://dx.doi.org/10.2139/ssrn.3420546

Sumit Agarwal (Contact Author)

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 117592
Singapore
8118 9025 (Phone)

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

Abhiroop Mukherjee

Hong Kong University of Science & Technology (HKUST) - Department of Finance ( email )

Clear Water Bay, Kowloon
Hong Kong

S Lakshmi Naaraayanan

Hong Kong University of Science & Technology (HKUST) - Department of Finance ( email )

Clear Water Bay, Kowloon
Hong Kong

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