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Caste and Credit: A Woeful Tale?

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  • Sunil Mitra Kumar
  • Ragupathy Venkatachalam

Abstract

This paper examines caste-based differences in farmers’ access to bank loans in rural India. We investigate whether banks practice taste-based discrimination on the basis of caste. In order to identify potential discrimination, we consider loan applications and approval decisions separately. We find significant inter-caste differences in application rates, and evidence of discrimination against Scheduled Tribe borrowers at the approval stage. To rule out the role of statistical discrimination, we simulate unobserved credit histories with various distributions. Evidence for taste-based discrimination persists despite accounting for unobservables. However, we find that this discrimination does not affect small farmers.

Suggested Citation

  • Sunil Mitra Kumar & Ragupathy Venkatachalam, 2019. "Caste and Credit: A Woeful Tale?," Journal of Development Studies, Taylor & Francis Journals, vol. 55(8), pages 1816-1833, August.
    • Handle: RePEc:taf:jdevst:v:55:y:2019:i:8:p:1816-1833
    DOI: 10.1080/00220388.2018.1425397
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    Cited by:

    1. Sandhya Garg & Samarth Gupta & Sushanta Mallick, 2023. "Does Social Identity Constrain Rural Entrepreneurship? The Role of Financial Inclusion," IEG Working Papers 460, Institute of Economic Growth.
    2. Christophe J. Nordman & Smriti Sharma & Naveen Sunder, 2022. "Here Comes the Rain Again: Productivity Shocks, Educational Investments, and Child Work," Economic Development and Cultural Change, University of Chicago Press, vol. 70(3), pages 1041-1063.
    3. Varshney, Deepak & Mishra, Ashok K. & Joshi, Pramod K. & Roy, Devesh, 2022. "Social networks, heterogeneity, and adoption of technologies: Evidence from India," Food Policy, Elsevier, vol. 112(C).
    4. Suresh Govindapuram & Samyukta Bhupatiraju & Rahul A. Sirohi, 2023. "Determinants of women's financial inclusion: Evidence from India," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(1), pages 131-158, March.

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