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Repayment in microfinance: The Role of financial literacy and caste

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  • Rashmi Baura

    (Jawharlal Nehru University)

  • Renuka Sane

    (Indian Statistical Institute, Delhi)

Abstract

We evaluate the impact of a mandatory lnancial education program on female customers of an urban micro-lnance institution (MFI) headquartered in Mumbai, India. We exploit the variation in timing of the lnancial literacy program across the branches to identify if there was an improvement in the loan repayment performance. Our results suggest that lnancial literacy led to a decline in the total number of days taken to make loan repayments as well as the number of months in which the repayment was late. More importantly, lnancial education helped those in homogeneous groups of reserved castes overcome their initial disadvantage of low lnancial literacy relative to those in mixed caste groups.

Suggested Citation

  • Rashmi Baura & Renuka Sane, 2014. "Repayment in microfinance: The Role of financial literacy and caste," Discussion Papers 14-06, Indian Statistical Institute, Delhi.
    • Handle: RePEc:alo:isipdp:14-06
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    References listed on IDEAS

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