Caste and credit: A woeful tale?

Sunil Mitra Kumar, Ragupathy Venkatachalam

Research output: Contribution to journalArticlepeer-review

13 Citations (Scopus)
227 Downloads (Pure)

Abstract

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.
Original languageEnglish
Pages (from-to)1816-1833
JournalJOURNAL OF DEVELOPMENT STUDIES
Volume55
Issue number8
Early online date1 Mar 2018
DOIs
Publication statusPublished - 3 Aug 2019

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