Accounting for Empowerment? Examining Women's Financial Inclusion in India

Bank accounts are an essential first step towards formal savings and credit in most countries, yet their impact on women's control over resources remains underexplored. I investigate the effects of 2014 policy in India that provided free bank accounts and led to an unprecedented increase in women's account ownership. This paper shows that bank account ownership improves households' financial access, and in certain cases increases women's decision making on household spending. Using a difference-in-difference estimation that exploits the sharp timing of the policy and a high-frequency household panel data, I find that women's account ownership increased household's likelihood to save in formal instruments and switch to formal sources of borrowing but did not affect consumption patterns consistent with women's preferences. Exploiting regional variation in pre-policy bank infrastructure, I further analyze the effects on women's self-reported decision-making. While districts with faster account expansion did not exhibit overall improvement of women's participation in household purchase decisions or spending autonomy, there were significant gains in districts where women had greater ex-ante mobility and households trusted banking institutions.