Financial Access and Gender Gap in Entrepreneurship and Employment: Evidence from Rural India

48 Pages Posted: 28 Oct 2021

See all articles by Sandhya Garg

Sandhya Garg

University of Delhi - Institute of Economic Growth (IEG)

Samarth Gupta

National Council of Applied Economic Research

Date Written: September 14, 2021

Abstract

Can expansion of bank branch network reduce gender-gap in economic activity at the village level? To explore this issue, we construct a novel village-level panel data where we observe the financial access of each unbanked village in India defined as its distance to the nearest village/town with bank branch (banked-center) from 1951-2019; and village-level enterprise data of four economic census rounds of 1990, 1998, 2005 and 2013. To account for endogeneity in placement of bank branches, we use a difference-in-difference methodology. We find that the presence of a bank branch within 5km of an un-banked village between 2005 and 2013 (Treatment Group) mitigated the gender gap in entrepreneurship, and employment. The increase in number of female enterprises and in the size of female employment occurs fully driven by non-agricultural sector, whereas a shift is observed in male entrepreneurship from agricultural to non-agricultural sector. We also find evidence that this transition may be a consequence of credit uptake by enterprises from non-institutional sources as proximity to a banked-center improves. Our results are robust to unobservable village and year effects, and presence of alternative village-level infrastructure.

Keywords: Credit, Banking, Branch Expansion, Gender Gap, Entrepreneurship, Enterprise and Development

JEL Classification: G21, G28, O12

Suggested Citation

Garg, Sandhya and Gupta, Samarth, Financial Access and Gender Gap in Entrepreneurship and Employment: Evidence from Rural India (September 14, 2021). Available at SSRN: https://ssrn.com/abstract=3923735 or http://dx.doi.org/10.2139/ssrn.3923735

Sandhya Garg

University of Delhi - Institute of Economic Growth (IEG) ( email )

Delhi, 110007
India

Samarth Gupta (Contact Author)

National Council of Applied Economic Research ( email )

Parisila Bhawan
11 - Indraprastha Estate
New Delhi, 110002
India

HOME PAGE: http://blogs.bu.edu/samarth/

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