Roads and Loans

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Abhiroop Mukherjee (HKUST)
Wednesday 7 March 2018 at 4:30 - 5:30 pm (Hong Kong time, GMT +8)
IAS2042, Lo Ka Chung Building, Lee Shau Kee Campus, Hong Kong University of Science and Technology

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Abstract

Does the flow of financing respond to changes in productive opportunities even for the world's poor? We answer this question by examining the response of private bank financing to a shock to the rural road network in India, which brought road access to hitherto unconnected villagers. The program prioritized road connectivity for villages above explicit population thresholds, thereby allowing us to exploit discontinuities in the probability of treatment to identify our effects. We find large financing responses to rural road connectivity -- over 50% more villagers receive loans, and the average amount lent to them is 30% higher – for villages right above the threshold compared to those just below. Roads seem to disproportionately benefit lower caste villagers who lack collateralizable assets, but have basic education.

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About the Speaker

Abhiroop Mukherjee is an Associate Professor of Finance at HKUST, which he joined in 2010 after receiving his PhD in Economics from Yale University. He studies issues related to behavioral and institutional finance, and has a keen interest in emerging markets. Abhiroop’s research has been published in all of the three top academic journals in finance, and some of his work has also been used in applied settings by banks, hedge funds and think tanks, both in Asia and in the U.S.

Acknowledgment

This research is supported by the Strategic Public Policy Research Funding Scheme from the Central Policy Unit of the HKSAR Government.   More >> 

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