Caste and credit: A woeful tale?

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Kumar, Sunil Mitra and Venkatachalam, Ragupathy. 2019. Caste and credit: A woeful tale? Journal of Development Studies, 55(8), pp. 1816-1833. ISSN 0022-0388 [Article]

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Official URL: https://www.tandfonline.com/doi/abs/10.1080/002203...

Abstract or Description

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.

Item Type:

Article

Identification Number (DOI):

https://doi.org/10.1080/00220388.2018.1425397

Additional Information:

Part of Kumar's work for this project was supported by the UNU-WIDER.