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Does Social Identity Constrain Rural Entrepreneurship? The Role of Financial Inclusion

Author

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  • Sandhya Garg
  • Samarth Gupta
  • Sushanta Mallick

    (Institute of Economic Growth, Delhi)

Abstract

This paper examines whether better financial access can mitigate the impact of social identity on entrepreneurship. Using a novel dataset of Indian villages and distance to bank branches, we find that proximity to a bank branch improves non-agricultural entrepreneurship of underprivileged caste groups in India, with a significant entry occurring in sectors which were dominated by the privileged caste groups. We find that this effect is mediated by the uptake of institutional credit by under-privileged groups. Our results show that the financial inclusion can break rigid social norms around caste and occupation in India.

Suggested Citation

  • 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.
    • Handle: RePEc:awe:wpaper:460
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