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Financial Access and Gender Gap in Entrepreneurship and Employment: Evidence from Rural India

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  • Sandhya Garg
  • Samarth Gupta

    (Institute of Economic Growth, Delhi)

Abstract

Can expansion of bank branch network reduce gender-gap in economic activity at the village level? To explore this issue, we construct a novel village-level panel data where we observe the financial access of each unbanked village in India defined as its distance to the nearest village/town with bank branch from 1951-2019; and village-level enterprise data of four economic census rounds of 1990, 1998, 2005 and 2013. To account for endogeneity in placement of bank branches, we use a difference-indifference methodology. We find that the presence of a bank branch within 5km of an un-banked village between 2005 and 2013 (Treatment Group) mitigated the gender gap in entrepreneurship, and employment. The increase in number of female enterprises and in the size of female employment occurs fully driven by non-agricultural sector, whereas a shift is observed in male entrepreneurship from agricultural to nonagricultural sector. We also find evidence that this transition may be a consequence of credit uptake by enterprises from non-institutional sources as proximity to a bankedcenter improves. Our results are robust to unobservable village and year effects, and presence of alternative village-level infrastructure.

Suggested Citation

  • Sandhya Garg & Samarth Gupta, 2021. "Financial Access and Gender Gap in Entrepreneurship and Employment: Evidence from Rural India," IEG Working Papers 442, Institute of Economic Growth.
    • Handle: RePEc:awe:wpaper:442
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    More about this item

    Keywords

    Credit; Banking; Branch Expansion; Gender Gap; Entrepreneurship; Enterprise and Development;
    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
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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