IDEAS home Printed from https://ideas.repec.org/a/asi/aeafrj/2019p1200-1210.html
   My bibliography  Save this article

How Livelihood Diversification and Institutional Credit Help to Improve Household Well-Being in India?

Author

Listed:
  • Zeeshan

    (Department of Economics and Finance, Birla Institute of Technology and Science (BITS), Pilani, Pilani Campus, Rajasthan, India.)

  • Md. Riyazuddin Khan

    (Department of Geography, Bhim Rao Ambedkar College, University of Delhi, New Delhi, India.)

  • Geetilaxmi Mohapatra

    (Department of Economics and Finance, Birla Institute of Technology and Science (BITS), Pilani, Pilani Campus, Rajasthan, India.)

  • Arun Kumar Giri

    (Department of Economics and Finance, Birla Institute of Technology and Science (BITS), Pilani, Pilani Campus, Rajasthan, India.)

Abstract

Using nationally representative data from the India Human Development Survey (IHDS) collected in 2011-12, this study examined the impact of livelihood diversification and accessibility to institutional credit on the monthly per capita consumption expenditure (MPCE) of households. The data provided information about 42,152 households, and our study focused on only the households that had taken a loan from any source, thus reducing the sample size to 22,630 households. The estimate suggested that, if a household had taken a loan from a formal source, then it was likely to have a higher MPCE by approximately 24.68 percent on average. We also found that households whose main source of income belonged to the secondary sector had a negative and insignificant coefficient while the coefficient of the tertiary sector suggested that they had about a 29 percent higher MPCE compared to those households who belonged to the primary sector. The results also suggested that Hindus had a higher consumption compared to Muslims. However, Christians and Sikhs had about 36 percent and 23 percent higher consumption, respectively, than Hindus. The study also found that households belong to lower social groups (OBC, SC, and ST) had lower consumption compared to households that belonged to the general category of the caste system.

Suggested Citation

  • Zeeshan & Md. Riyazuddin Khan & Geetilaxmi Mohapatra & Arun Kumar Giri, 2019. "How Livelihood Diversification and Institutional Credit Help to Improve Household Well-Being in India?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(10), pages 1200-1210, October.
  • Handle: RePEc:asi:aeafrj:2019:p:1200-1210
    as

    Download full text from publisher

    File URL: http://www.aessweb.com/download.php?id=4740
    Download Restriction: no

    File URL: http://www.aessweb.com/journals/5002/October2019
    Download Restriction: no

    References listed on IDEAS

    as
    1. Shoji, Masahiro & Aoyagi, Keitaro & Kasahara, Ryuji & Sawada, Yasuyuki & Ueyama, Mika, 2012. "Social Capital Formation and Credit Access: Evidence from Sri Lanka," World Development, Elsevier, vol. 40(12), pages 2522-2536.
    2. Brian T. Melzer, 2011. "The Real Costs of Credit Access: Evidence from the Payday Lending Market," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 517-555.
    3. Zaki, Mary, 2016. "Access to Short-term Credit and Consumption Smoothing within the Paycycle," ET: Economic Theory 232213, Fondazione Eni Enrico Mattei (FEEM).
    4. Sarmistha Pal, 2002. "Household sectoral choice and effective demand for rural credit in India," Applied Economics, Taylor & Francis Journals, vol. 34(14), pages 1743-1755.
    5. Mary Zaki, 2016. "Access to Short-term Credit and Consumption Smoothing within the Paycycle," Working Papers 2016.07, Fondazione Eni Enrico Mattei.
    6. Khamis, Melanie & Prakash, Nishith & Siddique, Zahra, 2012. "Consumption and social identity: Evidence from India," Journal of Economic Behavior & Organization, Elsevier, vol. 83(3), pages 353-371.
    7. Abhijit V. Banerjee & Esther Duflo, 2007. "The Economic Lives of the Poor," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 141-168, Winter.
    8. Morse, Adair, 2011. "Payday lenders: Heroes or villains?," Journal of Financial Economics, Elsevier, vol. 102(1), pages 28-44, October.
    9. Christine L. Dobridge, 2018. "High‐Cost Credit and Consumption Smoothing," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 50(2-3), pages 407-433, March.
    10. Zaki, Mary, 2016. "Access to Short-term Credit and Consumption Smoothing within the Paycycle," ETA: Economic Theory and Applications 232213, Fondazione Eni Enrico Mattei (FEEM).
    11. Mark M. Pitt & Shahidur R. Khandker, 1998. "The Impact of Group-Based Credit Programs on Poor Households in Bangladesh: Does the Gender of Participants Matter?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 958-996, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Will Dobbie & Andres Liberman & Daniel Paravisini & Vikram Pathania, 2018. "Measuring Bias in Consumer Lending," Working Papers 623, Princeton University, Department of Economics, Industrial Relations Section..
    2. Gomes, Francisco J & Haliassos, Michael & Ramadorai, Tarun, 2020. "Household Finance," CEPR Discussion Papers 14502, C.E.P.R. Discussion Papers.
    3. Dasgupta, Kabir & Mason, Brenden J., 2020. "The effect of interest rate caps on bankruptcy: Synthetic control evidence from recent payday lending bans," Journal of Banking & Finance, Elsevier, vol. 119(C).
    4. Mary Zaki, 2016. "Access to Short-term Credit and Consumption Smoothing within the Paycycle," Working Papers 2016.07, Fondazione Eni Enrico Mattei.
    5. Yuan, Yan & Xu, Lihe, 2015. "Are poor able to access the informal credit market? Evidence from rural households in China," China Economic Review, Elsevier, vol. 33(C), pages 232-246.
    6. Agarwal, Sumit & Amromin, Gene & Ben-David, Itzhak & Chomsisengphet, Souphala & Evanoff, Douglas D., 2014. "Predatory lending and the subprime crisis," Journal of Financial Economics, Elsevier, vol. 113(1), pages 29-52.
    7. Alex Kaufman, 2013. "Payday lending regulation," Finance and Economics Discussion Series 2013-62, Board of Governors of the Federal Reserve System (U.S.).
    8. Singh, Nirvikar, 2018. "Financial Inclusion: Concepts, Issues and Policies for India," MPRA Paper 91047, University Library of Munich, Germany.
    9. Anzoategui, Diego & Demirgüç-Kunt, Asli & Martínez Pería, María Soledad, 2014. "Remittances and Financial Inclusion: Evidence from El Salvador," World Development, Elsevier, vol. 54(C), pages 338-349.
    10. Donald P. Morgan & Michael R. Strain & Ihab Seblani, 2012. "How Payday Credit Access Affects Overdrafts and Other Outcomes," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44, pages 519-531, March.
    11. Dean Karlan & Jonathan Zinman, 2010. "Expanding Credit Access: Using Randomized Supply Decisions to Estimate the Impacts," Review of Financial Studies, Society for Financial Studies, vol. 23(1), pages 433-464, January.
    12. Abbi M. Kedir & Ibrahim,Gamal, 2012. "Household-Level Credit Constraints in Urban Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 20(1), September.
    13. Robin Prager, 2014. "Determinants of the Locations of Alternative Financial Service Providers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 45(1), pages 21-38, August.
    14. Peter Debbaut & Andra C. Ghent & Marianna Kudlyak, 2013. "Are young borrowers bad borrowers? Evidence from the Credit CARD Act of 2009," Working Paper 13-09, Federal Reserve Bank of Richmond.
    15. Cuffe, Harold E. & Gibbs, Christopher G., 2017. "The effect of payday lending restrictions on liquor sales," Journal of Banking & Finance, Elsevier, vol. 85(C), pages 132-145.
    16. Doris Neuberger & Udo Reifner, 2020. "Systemic Usury and the European Consumer Credit Directive," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 89(1), pages 115-132.
    17. König, Tobias & Lausen, Tobias, 2016. "Relative consumption preferences and public provision of private goods," Discussion Papers, Research Unit: Market Behavior SP II 2016-213, WZB Berlin Social Science Center.
    18. Paolo Casini & Lore Vandewalle & Zaki Wahhaj, 2017. "Public Good Provision in Indian Rural Areas: The Returns to Collective Action by Microfinance Groups," World Bank Economic Review, World Bank Group, vol. 31(1), pages 97-128.
    19. Mathieu R. Despard & Michal Grinstein-Weiss & Chunhui Ren & Shenyang Guo & Ramesh Raghavan, 2017. "Effects of a Tax-Time Savings Intervention on Use of Alternative Financial Services among Lower-Income Households," Journal of Consumer Affairs, Wiley Blackwell, vol. 51(2), pages 355-379, July.
    20. Viktar Fedaseyeu, 2012. "Debt Collection Agencies and the Supply of Consumer Credit," Working Papers 442, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.

    More about this item

    Keywords

    Livelihood diversification; Non-Farm business; Credit sources; Credit purposes; Household well-being; India.;
    All these keywords.

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:asi:aeafrj:2019:p:1200-1210. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chan Hoi Yan). General contact details of provider: http://www.aessweb.com/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.