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The Real Cost of Credit Constraints: Evidence from Micro-finance.
- Source :
- B.E. Journal of Economic Analysis & Policy; Jan2016, Vol. 16 Issue 1, p151-183, 33p, 13 Charts, 4 Graphs
- Publication Year :
- 2016
-
Abstract
- The paper studies the effect of a law that banned micro-credit lending in the state of Andhra Pradesh in India. Regions in Andhra Pradesh are matched to regions that did not face the ban. A difference-in-difference estimation of changes in matched regions is used to establish a causal impact on average household consumption in the region. The results show that the average household consumption in the ban-affected regions dropped by 15% immediately after the ban compared to the matched regions, and persisted for four quarters. The result is robust to cross-sectional variations in regional exposure to micro-finance prior to the ban, variation in rural and urban locations and variations in matching strategy. The analysis points to a ban as a sub-optimal intervention to improve customer welfare. [ABSTRACT FROM AUTHOR]
- Subjects :
- MICROFINANCE
CREDIT
CONSUMPTION (Economics)
INTEREST rates
PROFITABILITY
MORTGAGES
Subjects
Details
- Language :
- English
- ISSN :
- 21946108
- Volume :
- 16
- Issue :
- 1
- Database :
- Complementary Index
- Journal :
- B.E. Journal of Economic Analysis & Policy
- Publication Type :
- Academic Journal
- Accession number :
- 112192909
- Full Text :
- https://doi.org/10.1515/bejeap-2014-0154