CREDIT RATIONING IN RURAL INDIA

The view that households are credit rationed by the formal sector, rests on the assumptions that all households have a positive demand for formal credit and it is a cheaper source for borrowing. To empirically verify formal credit rationing three different models are estimated in this paper. The first model is a conventional credit-rationing model. The second model assumes that the probability to borrow from the formal sector is jointly determined by the demand for credit and the decision of the bank on access. Finally, the third model relaxes both these assumptions and the household chooses between borrowing from the formal or the informal sector. Empirical results using recently collected data from Puri, India, confirm that the access to the formal sector in the rural credit markets is limited and there exists a high demand for credit. This suggests a high degree of effective credit rationing by the formal sector in Puri.Credit, Rationing, Rural

The Demand and Supply of Credit for Households

The demand and supply of credit in the rural credit markets is investigated in this paper using household data from India. The aim is to study the effects of household, farm productive characteristics and the policy variables on the demand and supply of credit. A type 3 Tobit model is estimated which corrects for sample selection and endogeniety bias. In addition, a generalised Double Hurdle model is estimated where the information on the household’s access to credit is included to estimate the demand and supply of credit. The results suggest that the size of the operational holdings, net-wealth, dependency ratio, educational level of the household and the wages and output prices are important determinants of the demand and supply of credit for farm households. The Double Hurdle model confirms that the ‘size of land owned’ plays a crucial role in whether the household has access to a loan or not

Food Security, Gender and Occupational Choice among Urban Low-Income Households

Rising urban poverty and food insecurity are serious concerns in developing countries today. Urban livelihoods and coping strategies remain poorly understood however. This paperexamines the response of female and male household members in marginalized urban (predominantly squatter) areas to the risk of food shortage in terms of occupational choice. More specifically, we use probit analyses to investigate whether household vulnerability or the need to provide self-insurance for food security, alongside gender roles, influence a worker's choice of enterprise activity. We focus our investigation on self-employed women and men using a data set drawn from the 1496 individual sample in 14 urban squatter communities in Bolivia, Ecuador, Philippines and Thailand. Our findings show that selfemployed women in households facing higher risk of food insecurity are likely to engage in food-related enterprise activities and this is especially true in Philippines and Thailand. This suggests the role of occupational choice in in helping urban squatter households in mitigating the risk of food shortage through the selection of an income-generating activity that allows the direct use of unsold inventories for food consumption.food security, self-employment, occupational choice, urban informal secto

Implication of Electricity Taxes and levies on Sustainable Development Goals in the European Union

The current high electricity prices in the European Union (EU) are in part due to the high electricity taxes. United Nations’ Sustainable Development Goals (SDGs) Agenda with its global vision of attaining sustainable development especially seeks “to ensure universal access to affordable, reliable and modern energy services” (SDG 7). We investigate the synergy and trade-off effects of electricity taxes on sustainable development goals (SDGs) for the EU. Using panel data and panel vector autoregressive estimation approach, we find that higher household electricity taxes reduce both carbon emission and unemployment. Higher levels of industry electricity taxes, increase responsible production and consumption (SDG12) and reduces unemployment (SDG8). Furthermore, there is evidence for a strong synergy effect between electricity taxes, unemployment and carbon emission but a trade-off between tax and SDG9 (innovation and sustainable infrastructure). The taxes contribute more to the future variation of unemployment and responsible production and consumption in the EU, but these contributions are much larger for the industry as compared to the household sector. Our results confirm the double-dividend hypothesis, which implies that the policymakers can achieve environmental goals with higher electricity taxes, especially on household electricity. In the industrial sector, our findings suggest that there is a need for tax reform, to encourage innovation and adopt production processes that are less polluting to the environment

Regulation, governance and the role of the informal sector in influencing environmental quality?

We investigate the effect of the informal sector and a range of governance indicators on both global and local pollutants for a panel of 58 countries during 1996-2011. The analysis employs a fixed effects-instrumental variable generalized method of moments approach. We find that the size of the informal sector has a significant impact on environmental quality, which is conditional on the level of economic development. For developing countries, the informal sector has a significant positive impact on local pollutants, whereas for the developed countries the informal sector has a significantly negative effect on global pollutants. The findings also reveal that the impact of governance depends on the type of governance measure, the level of economic development and type of pollutant. Control of corruption emerges as the single most important factor especially in the non-OECD countries in improving environmental quality. We argue that the efficacy of an environmental policy for a country with a large informal sector will be low if the policy measures do not address governance, size of the informal sector and environmental policy targets

The Sustainable Development Oxymoron: Quantifying and Modelling the Incompatibility of Sustainable Development Goals

In 2015, the UN adopted a new set of Sustainable Development Goals (SDGs) to eradicate poverty, establish socioeconomic inclusion and protect the environment. Critical voices such as the International Council for Science, however, have expressed concerns about the potential incompatibility of the SDGs, specifically the incompatibility of socio-economic development and environmental sustainability. In this paper we test, quantify and model the alleged inconsistency of SDGs. Our analyses show which SDGs are consistent and which are conflicting. We measure the extent of inconsistency and conclude that the SDG agenda will fail as a whole if we continue with business as usual. We further explore the nature of the inconsistencies using dynamical systems models, which reveal that the focus on economic growth and consumption as a means for development underlies the inconsistency. Our models also show that there are factors which can contribute to development (health programs, government investment in education) on the one hand and ecological sustainability (renewable energy) on the other, without triggering the conflict between incompatible SDGs

Credit rationing in rural India

The view that households are credit rationed by the formal sector, rests on the assumptions that all households have a positive demand for formal credit and it is a cheaper source for borrowing. To empirically verify formal credit rationing three different models are estimated in this paper. The first model is a conventional credit-rationing model. The second model assumes that the probability to borrow from the formal sector is jointly determined by the demand for credit and the decision of the bank on access. Finally, the third model relaxes both these assumptions and the household chooses between borrowing from the formal or the informal sector. Empirical results using recently collected data from Puri, India, confirm that the access to the formal sector in the rural credit markets is limited and there exists a high demand for credit. This suggests a high degree of effective credit rationing by the formal sector in Puri

Can microfinance empower women? Self-help groups in India. Microfinance and Gender: New Contributions to an Old Issue

Améliorer le contrôle interne Améliorer le contrôle interne Microfinance programmes like the Self-Help Bank Linkage Programme (SHG) in India have been increasingly hailed for their positive economic impact and the empowerment women. This is based on the view that women are more likely to be credit constrained, have restricted access to wage labour market and have limited decision-making and bargaining power within the household. This article argues that true women empowerment takes place when women challenge the existing norms and culture, to effectively improve their well being. 82 While doing so, it carefully interprets the World Bank's definition of empowerment within the South Asian contexts and makes comprehensible distinctions between community driven development, efficiency improving activities that are culturally considered to be women's domain and activities which truly empower women. Based on this conceptual framework the results of the Focus Group Discussions (FGD) and interviews analyze the activities through which the Self Help Groups impact the lives of women in India. It is argued that only a fraction of these activities are truly empowering for the participating women, however, drawing inference from the household data, preliminary results indicate that SHGs could be leading to empowerment of women. Literature survey To truly understand the complexity of women empowerment and its different aspects, one has first to look at the existent definitions of the concept, at how it was measured and at the conclusions taken with regards to microfinance. 81 [email protected] 82 This paper is based on author's earlier wor

Demand, segmentation and rationing in the rural credit markets of Puri

This thesis consists of five chapters. Chapter 1 and 2 The first chapter presents the introduction and the summary and the second chapter provides details on the survey and the data collection. Chapter 3 The demand and supply of credit in the rural finance markets are investigated in this paper using data on 989 households, in Orissa, India. The aim is to study the effects of household, farm productive characteristics and the policy variables on the demand and supply of credit. A type 3 Tobit model is estimated which corrects for sample selection and endogeniety bias. In addition, a generalised Double Hurdle model is estimated where the household's access to credit is treated distinctly from decisions about the interest rate charged. The results from the type 3 tobit model suggest that the size of the operational holdings, net-wealth, the dependency ratio, educational level of the household and the wages and output prices are important determinants of the demand and supply of credit. The Double Hurdle model suggests the important result that the size of land owned plays a crucial role in whether the household obtains a loan or not. Chapter 4 Based on the 'Rural Credit Market Survey of the Puri district in India', this paper investigates evidence on segmentation in the rural credit markets of Puri district. It further investigates the presence of any systematic association between the type of collateral offered by the household and the rate of interest at which it borrows. The data shows differences in the loan characteristics between the households borrowing from the formal and the informal sector. The empirical results confirm the presence of segmentation in the Puri credit market. For the households borrowing from the informal sector and the moneylenders, evidence also shows that the marketability of the collateral is inversely related to the interest rate. However, no such clear relationship is found for households borrowing from the formal sector. Chapter 5 In the theoretical and the empirical literature on rural credit markets it is widely assumed that the households are credit rationed in the formal sector, which offers subsidised credit. This view rests on the assumptions that all households have a positive demand for formal credit and that it is the cheaper source of credit. Three different models of formal credit rationing are estimated in this paper. The first model is a conventional credit-rationing model. The second model assumes that the probability to borrow from the formal sector is jointly determined by the demand for credit and the decision of the bank on access. Finally, the third model relaxes both these assumptions and the household chooses between borrowing from the formal or the informal sector. The results confirm that the access to the formal sector in the Puri rural credit markets is limited and that there exists a high demand for credit. This suggests a high degree of effective credit rationing by the formal sector in Puri

Demand, segmentation and rationing in the rural credit markets of Puri

This thesis consists of five chapters. Chapter 1 and 2 The first chapter presents the introduction and the summary and the second chapter provides details on the survey and the data collection. Chapter 3 The demand and supply of credit in the rural finance markets are investigated in this paper using data on 989 households, in Orissa, India. The aim is to study the effects of household, farm productive characteristics and the policy variables on the demand and supply of credit. A type 3 Tobit model is estimated which corrects for sample selection and endogeniety bias. In addition, a generalised Double Hurdle model is estimated where the household's access to credit is treated distinctly from decisions about the interest rate charged. The results from the type 3 tobit model suggest that the size of the operational holdings, net-wealth, the dependency ratio, educational level of the household and the wages and output prices are important determinants of the demand and supply of credit. The Double Hurdle model suggests the important result that the size of land owned plays a crucial role in whether the household obtains a loan or not. Chapter 4 Based on the 'Rural Credit Market Survey of the Puri district in India', this paper investigates evidence on segmentation in the rural credit markets of Puri district. It further investigates the presence of any systematic association between the type of collateral offered by the household and the rate of interest at which it borrows. The data shows differences in the loan characteristics between the households borrowing from the formal and the informal sector. The empirical results confirm the presence of segmentation in the Puri credit market. For the households borrowing from the informal sector and the moneylenders, evidence also shows that the marketability of the collateral is inversely related to the interest rate. However, no such clear relationship is found for households borrowing from the formal sector. Chapter 5 In the theoretical and the empirical literature on rural credit markets it is widely assumed that the households are credit rationed in the formal sector, which offers subsidised credit. This view rests on the assumptions that all households have a positive demand for formal credit and that it is the cheaper source of credit. Three different models of formal credit rationing are estimated in this paper. The first model is a conventional credit-rationing model. The second model assumes that the probability to borrow from the formal sector is jointly determined by the demand for credit and the decision of the bank on access. Finally, the third model relaxes both these assumptions and the household chooses between borrowing from the formal or the informal sector. The results confirm that the access to the formal sector in the Puri rural credit markets is limited and that there exists a high demand for credit. This suggests a high degree of effective credit rationing by the formal sector in Puri