King's College London

TY - JOUR

T1 - Caste and credit

T2 - A woeful tale?

AU - Kumar, Sunil Mitra

AU - Venkatachalam, Ragupathy

PY - 2019/8/3

Y1 - 2019/8/3

N2 - This paper examines caste-based differences in farmers’ access to bank loans in rural India. We investigate whether banks practice taste-based discrimination on the basis of caste. In order to identify potential discrimination, we consider loan applications and approval decisions separately. We find significant inter-caste differences in application rates, and evidence of discrimination against Scheduled Tribe borrowers at the approval stage. To rule out the role of statistical discrimination, we simulate unobserved credit histories with various distributions. Evidence for taste-based discrimination persists despite accounting for unobservables. However, we find that this discrimination does not affect small farmers.

AB - This paper examines caste-based differences in farmers’ access to bank loans in rural India. We investigate whether banks practice taste-based discrimination on the basis of caste. In order to identify potential discrimination, we consider loan applications and approval decisions separately. We find significant inter-caste differences in application rates, and evidence of discrimination against Scheduled Tribe borrowers at the approval stage. To rule out the role of statistical discrimination, we simulate unobserved credit histories with various distributions. Evidence for taste-based discrimination persists despite accounting for unobservables. However, we find that this discrimination does not affect small farmers.

U2 - 10.1080/00220388.2018.1425397

DO - 10.1080/00220388.2018.1425397

M3 - Article

VL - 55

SP - 1816

EP - 1833

JO - JOURNAL OF DEVELOPMENT STUDIES

JF - JOURNAL OF DEVELOPMENT STUDIES

SN - 0022-0388

IS - 8

ER -