What Does Debt Relief Do for Development? Evidence from India’s Bailout Program for Highly-Indebted Rural Households

Kanz, Martin

What Does Debt Relief Do for Development? Evidence from India’s Bailout Program for Highly-Indebted Rural Households

2012

Kanz, Martin

This paper studies the impact of a large debt relief program, intended to attenuate investment constraints among highly-indebted households in rural India. It isolates the causal effect of bankruptcy-like debt relief settlements using a natural experiment arising from India's Debt Relief Program for Small and Marginal Farmers -- one of the largest debt relief initiatives in history. The analysis shows that debt relief has a persistent effect on the level of household debt, but does not increase investment and productivity as predicted by theories of debt overhang. Instead, the anticipation of future credit constraints leads to a greater reliance on informal financing, lower investment and a decline in productivity among bailout recipients. The results suggest that one-time settlements may be insufficient to incentivize new investment, but can have significant real effects through their impact on borrower expectations.

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Ключевые слова АГРОВОК

agricultural credit agricultural sector bank loans bankruptcy banks cash transfers commercial banks cooperative banks cooperatives corruption credit cooperatives debt developing countries discrimination expenditure farmer farmers gender household income households indebtedness insurance interest rates international bank land records landowners liquid assets liquidity microcredit microenterprises microfinance productivity repayment returns urban areas village villages

Библиографическая информация

Другие темы

Debt overhang; Legal reform; Informal lenders; Market discipline; Commercial bank; Repayment difficulties; Eligibility criteria; Credit contract; Bankruptcy laws; Return; Borrowing; Loan size; Lower-income borrowers; External borrowing; Crop value; Husband; Consumption expenditures; Debt contract; Moral hazard; Physical capital; Credit constraints; Credit cooperative; Agricultural activities; Loan applications; Informal loans; Personal bankruptcy; Financial support; Repayment incentives; Value of debt; Risk of fraud; Financial services; Agricultural loans; Protection of creditor; Level of debt; Crop loans; Debts; Creditworthiness; Bankruptcy regulation; Access to credit; Household welfare; Lenders; Ex-ante incentives; Beneficiaries; Credit market; Financing requirements; Investment loans; Cooperative bank; Defaulter; Credit rationing; Informal sector lenders; Investment opportunities; Effect of debt; Rural credit; Debt recovery; Existing credit; Debt restructuring; Information asymmetries; Productive investment; Access to finance; Debt burden; Decline in investment; Existing debt; Credit expansion; Sovereign debt; Transparency; Bank credit; Formal lending; Market failures; Overdue loan; Risk of default; Checks; Creditors; Dependent; Market distortions; Poverties; Investment decisions; Loan amounts; Conditional debt; Bank branches; Corporate borrowing; Enforcement of loan contracts; International development; Institutional lenders; Bankruptcy decision; Borrower; Consumer bankruptcy; Collateral; Credit markets; Loan contracts; Informal financing; Household investment; Financial access; Internal financing; Access to savings; Loans from banks; Financial instruments; Source of income; Borrower behavior; Impact of debt; Defaults; Volatile incomes; Bank debt; Investment decision; Debt service; Emerging ¸ markets; Central bank; Income shocks; Loans from friends; Ownership structure; Bank branch; Debt contracts; Settlements; Enforcement of loan; Future credit; Cash payments; Consumer credit; Government interventions; Indebted; Line of credit; Social banking; Outstanding debt; Micro-enterprise; Reserve bank; Debt holders; Debt forgiveness; Local bank; Political economy; Disbursement; Household finance; Savings accounts; Bank accounts; Bailouts; Settlement; Dummy variable; Expenditures; Farm loans; Creditor; Investment choice; Outstanding balance; Private credit; Eligible debt; Crop loan; Investment spending; Rural banks; Revolving line of credit; Informal credit; Supply of credit; National debt; Bank financing; Credit culture; Agricultural debt; Outstanding loans; Credit relationships; Loan characteristics; Large debt; Defaulters; Interest rate; Economic decisions; Institutional credit; Indebted households; Federal reserve; Internal audits; Credit relationship; Land holding; Residual claimants; Access to formal credit; Amount of debt; Bank loan; Micro-entrepreneurs; Sources of credit; Total debt; Face value; Loan repayment; New bank credit; Bailout; Inequality; Household wealth; Loan; Enforceability; Beneficiary; Financial position; Emerging credit; Moneylenders; Household debt; Effect of bankruptcy; Debtors; Liquidity constraints; Investment behavior; Debt relief; Creditor rights; Lender; Loan category; Enforceability of debt contracts

Язык

Английский

Формат

application/pdf, text/plain

Лицензия

CC BY 3.0 IGO, http://creativecommons.org/licenses/by/3.0/igo/, World Bank

В АГРИСе с: 2024-10-18

Дата изменения: 2025-04-17

Формат: Dublin Core

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