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Infrastructure and Finance: Evidence from India's GQ Highway Network

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  • Das,Abhiman
  • Ghani,Ejaz
  • Grover,Arti Goswami
  • Kerr,William Robert
  • Nanda,Ramana

Abstract

This paper uses the construction of India's Golden Quadrangle central highway network, together with comprehensive loan data from the Reserve Bank of India, to investigate the interaction between infrastructure development and financial sector depth. The paper identifies a disproportionate increase in loan count and average loan size in districts along the Golden Quadrangle highway network, using stringent specifications with industry and district fixed effects. The results hold in straight-line instrumental variable frameworks and are not present in placebo tests with another highway that was planned to be upgraded at the same time as Golden Quadrangle but subsequently delayed. Importantly, however, the results are concentrated in districts with stronger initial financial development, suggesting that although financing responds to large infrastructure investments and helps spur real economic outcomes, initial financial sector development might play an important role in determining where real activity will grow.

Suggested Citation

  • Das,Abhiman & Ghani,Ejaz & Grover,Arti Goswami & Kerr,William Robert & Nanda,Ramana, 2019. "Infrastructure and Finance: Evidence from India's GQ Highway Network," Policy Research Working Paper Series 8885, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8885
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    File URL: http://documents.worldbank.org/curated/en/729281560437538266/pdf/Infrastructure-and-Finance-Evidence-from-Indias-GQ-Highway-Network.pdf
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    Cited by:

    1. Suchi Kapoor Malhotra & Howard White & Nina Ashley O. Dela Cruz & Ashrita Saran & John Eyers & Denny John & Ella Beveridge & Nina Blöndal, 2021. "Studies of the effectiveness of transport sector interventions in low‐ and middle‐income countries: An evidence and gap map," Campbell Systematic Reviews, John Wiley & Sons, vol. 17(4), December.

    More about this item

    Keywords

    Pulp&Paper Industry; Textiles; Apparel&Leather Industry; General Manufacturing; Food&Beverage Industry; Common Carriers Industry; Construction Industry; Plastics&Rubber Industry; Business Cycles and Stabilization Policies; Roads and Highways Performance; Roads&Highways; Inter-Urban Roads and Passenger Transport; Transport Services; Financial Sector Policy; Economic Growth; Industrial Economics; Economic Theory&Research;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H4 - Public Economics - - Publicly Provided Goods
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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