Social groups and credit shocks : evidence of inequalities in consumption smoothing
Abstract
A strand of research holds the view that restricting access to credit to regulate over-borrowing can worsen consumers’ financial condition. Another strand of research holds the view that access to credit in the developing countries with subprime credit markets is determined by social groupings and ethnic affiliations. By merging these two strands of research, we investigate the impact of Andhra Pradesh microfinance act (2010) on the consumption expenditure of marginalised social groups and the upper caste Hindu groups in India. We construct an aggregated district level panel data for eight quarters and estimate the impact of unanticipated policy change. The results of our analysis show that the sudden restriction of access to credit has relatively larger impact on the consumption levels of the marginalised social groups: lower castes, tribes, and Muslims. The findings also confirm the failure of contingency policy enacted for smoothing consumption.
Citation
Saxena , V , Bindal , I & LeMay-Boucher , P 2020 , ' Social groups and credit shocks : evidence of inequalities in consumption smoothing ' , Economic Analysis and Policy , vol. 68 , pp. 311-326 . https://doi.org/10.1016/j.eap.2020.10.004
Publication
Economic Analysis and Policy
Status
Peer reviewed
ISSN
0313-5926Type
Journal article
Rights
Copyright © 2020 Economic Society of Australia, Queensland. Published by Elsevier B.V. All rights reserved. This work has been made available online in accordance with publisher policies or with permission. Permission for further reuse of this content should be sought from the publisher or the rights holder. This is the author created accepted manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at https://doi.org/10.1016/j.eap.2020.10.004
Collections
Items in the St Andrews Research Repository are protected by copyright, with all rights reserved, unless otherwise indicated.