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Impact of Credit Accessibility on the Earnings of Self-employed Businesses in India

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  • Bairagya, Indrajit
  • Bhattacharya, Tulika
  • Bhattacharjee, Manojit

Abstract

The study assesses the impact of credit accessibility on the earnings of self-employed small businesses in India. Using unincorporated non-agricultural enterprises survey data provided by National Survey Sample Organisation (NSSO) on the Indian economy for the year 2015-16, the paper shows that access to credit augments earnings of self-employed businesses. The paper also separately shows the impact of credit availed from formal and informal lending agencies on self-employment earnings. Interestingly, we observe that both these lending agencies have a positive impact, even though the terms and conditions are not favourable in the informal market. Based on our findings we suggest for creation of informal-formal credit linkage programme akin to that of SHG bank linkage programme in which enterprises that do not possess accessibility to formal sources due to absence of collateral can also get formal credits through informal lenders at favourable terms and conditions.

Suggested Citation

  • Bairagya, Indrajit & Bhattacharya, Tulika & Bhattacharjee, Manojit, 2020. "Impact of Credit Accessibility on the Earnings of Self-employed Businesses in India," Journal of Asian Economics, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:asieco:v:69:y:2020:i:c:s1049007820300828
    DOI: 10.1016/j.asieco.2020.101202
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    Cited by:

    1. Anviksha Drall & Sabuj Kumar Mandal, 2020. "Determinants of various modes of rural non-farm sector (RNFS) employment in SAT (semi-arid tropics) and Eastern regions of India: an empirical analysis," Indian Economic Review, Springer, vol. 55(2), pages 253-282, December.
    2. Senou, Melain Modeste & Manda, Julius, 2021. "Access to Finance and Rural Youth Entrepreneurship in Benin: Is There a Gender Gap?," 2021 Conference, August 17-31, 2021, Virtual 315077, International Association of Agricultural Economists.
    3. Francis Lwesya & Adam Beni Swebe Mwakalobo, 2023. "Frontiers in microfinance research for small and medium enterprises (SMEs) and microfinance institutions (MFIs): a bibliometric analysis," Future Business Journal, Springer, vol. 9(1), pages 1-18, December.
    4. Indrajit Bairagya & Tulika Bhattacharya & Pragati Tiwari, 2021. "Does Vocational Training Promote Female Labour Force Participation? An Analysis for India," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 15(1), pages 149-173, February.

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    More about this item

    Keywords

    Access to finance; Self-employment; Earnings;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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