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Do Rural Banks Matter That Much? Burgess and Pande (AER, 2005) Reconsidered

Author

Listed:
  • Nino Buliskeria

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University Opletalova 26, 110 00, Prague, Czech Republic)

  • Jaromir Baxa

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University Opletalova 26, 110 00, Prague, Czech Republic
    bThe Czech Academy of Sciences, Institute of Information Theory and Automation, Pod Vodarenskou Vezi 4, 182 00, Prague, Czech Republic)

Abstract

We replicate Burgess and Pande (2005), who analyze the effects of the state-led expansion of the banking sector on poverty in India from 1961 to 1990. They find that the bank branch expansion in the rural areas decreased poverty due to improved access to credit and saving facilities. However, Burgess and Pande (2005) do not consider other simultaneous policies affecting the financial sector and poverty, in particular, the Integrated Rural Development Program aiming at credit subsidizing for the poor. Therefore, using the methodology by Burgess and Pande (2005), we show that structural shifts in the rural bank branch expansion and rural poverty can be identified for almost any other year between 1970 and 1984. Our results imply that the experiment by Burgess and Pande (2005) does not prove a superior impact of the bank branch expansion on poverty reduction in India.

Suggested Citation

  • Nino Buliskeria & Jaromir Baxa, 2020. "Do Rural Banks Matter That Much? Burgess and Pande (AER, 2005) Reconsidered," Working Papers IES 2020/16, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised May 2020.
    • Handle: RePEc:fau:wpaper:wp2020_16
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    File URL: https://ies.fsv.cuni.cz/en/veda-vyzkum/working-papers/6255
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    More about this item

    Keywords

    Bank expansion; rural poverty; finance;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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