Do rural banks matter that much? Burgess and Pande (2005) reconsidered
| Author(s): | PhDr. Jaromír Baxa Ph.D., Nino Buliskeria , |
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| Type: | Articles in journals with impact factor |
| Year: | 2022 |
| Number: | 0 |
| ISSN / ISBN: | |
| Published in: | Journal of Applied Econometrics |
| Publishing place: | |
| Keywords: | access to finance, finance and development, rural poverty |
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| Grants: | GACR no. 20-14990S: Economic policy in times of uncertainty (submitted in March 2019) GAUK 1034519: Financial development and income inequality UNCE Doctoral Fellowship |
| Abstract: | We replicate Burgess and Pande's (2005) analysis of the effect of India's state-led bank expansion on poverty. The authors instrument rural bank branch expansion by its trend reversal explained by the 1977 licensing rule and find that the bank expansion decreased poverty. However, the authors do not consider other licensing rule amendments and concurrent policies. Thus, their instrument is not necessarily exogenous to poverty. We show that the significant effect of bank expansion on poverty disappears after summarizing the trend reversal with more breaks linked to the bank licensing policy. |
