Advertisement

Impacts of Caste, Risk, and Time Preference on Borrowing Behaviour: A Case Study in West Bengal, India

  • Nina Takashino
  • Keshav L. Maharjan
  • Seiichi Fukui
Chapter

Abstract

The objectives of this chapter are to investigate the determinants of households’ borrowing behaviour in rural India, focusing on the impacts of caste, risk coping behaviour, and discount rate. Our main findings are as follows: First, the results of estimation suggest that the upper caste households are more likely to get lower interest loan from formal financial institutions or relatives and friend, while it may be difficult for the lower caste households to have access to such lower interest loan. Second, the results imply that if households borrow money to cope with shocks, they tend to get zero interest loans from relatives and friends. Third, the households who belong to the upper caste can borrow the larger amount of money. These findings suggest that the upper caste households accumulate the larger social capital. Fourth, the estimation results indicate that higher the discount rate, smaller the amount of zero interest loans from relatives and friends. Our findings suggest that caste and time preference play important roles to determine borrowing behaviour in West Bengal, India.

Keywords

Discount Rate Time Preference Family Labor Lower Caste Microfinance Institution 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

References

  1. Ashraf N, Karlan D, Yin W (2006) Tying odysseus to the mast: evidence from a commitment savings product in the Philippines. Q J Econ 121(2):635–672Google Scholar
  2. Banerjee A (2007) Contracting constraints, credit markets and economic development. MIT Working paper series, 02–17Google Scholar
  3. Bardhan P, Udry C (2001) Development microeconomics. Oxford University Press, OxfordGoogle Scholar
  4. Basu P (2006) Improving access to finance for India’s rural poor. World Bank Publications, New DelhiGoogle Scholar
  5. Bauer M, Chytilova, Morduch L (2010) Behavioural foundations of microcredit: experimental and survey evidence from rural India. IZA, discussion paper No. 4901Google Scholar
  6. Bhattacharjee M, Rajeev M, Vani BP (2010) Asymmetry in information and varying rates of interest: a study of the informal credit in West Bengal. J Appl Econ Res 3(4):339–364CrossRefGoogle Scholar
  7. Cardenas JC, Carpenter J (2005) Experiments and economic development: lessons from field labs in the developing world. http://community.middlebury.edu/~jcarpent/papers.html
  8. De Weerdt J, Dercon S (2006) Risk-sharing networks and insurance against illness. J Dev Econ 81(2):337–356Google Scholar
  9. Fafchamps M (1999) Risk sharing and quasi-credit. J Int Trade Econ Dev 8(3):257–278CrossRefGoogle Scholar
  10. Fafchamps M, Lund S (2003) Risk-sharing networks in rural Philippines. J Dev Econ 71:261–287CrossRefGoogle Scholar
  11. Fafchamps M, Gubert F (2007) The formation of risk sharing networks. J Dev Econ 83(2):326–350Google Scholar
  12. Foster A, Rosenzweig M (2001) Imperfect commitment, altruism and the family: evidence from transfer behaviour in low income rural areas. Rev Econ Stat 83(3):389-407Google Scholar
  13. Fujita K, Sato K (2011) Self-help groups and the rural financial market a case of a Tamil Nadu Village. SE Asian Stud 49(1):74–92Google Scholar
  14. Gine X, Yang D 92009) Insurance, credit and technology adoption: field experimental evidence from Malawi. J Dev Econ 89(1):1–11Google Scholar
  15. Karlan D, Gine X (2011) Group versus individual liability: long term evidence from Philippne microcredit lending groups. World BankGoogle Scholar
  16. Kirby K N, Godoy R, Reyes-Garcia V, Byron E, Apaza L, Leonard W, Perez E, Vadez V, Wilkie D (2002) Correlates of delay-discount rates: evidence from Tsimane' Amerindians of the Bolivian rain forest. J Econ Psychol 23(3):291–316Google Scholar
  17. Kochar A (1997) An empirical investigation of rationing constraints in rural credit markets in India. J Dev Econ 53:339–371Google Scholar
  18. Kumar A, Singh KM, Sinha S (2010) Institutional credit to agricultural sector in india: status, performance and determinants. Agric Econ Res Rev 23:253–264Google Scholar
  19. Munshi K, Rosenzweig M (2009) Why is mobility in India so low? Social insurance, inequality, and growth. NBER working papers 14850Google Scholar
  20. Pender JL (1996) Discount rates and credit markets: Theory and evidence from rural India. J Dev Econ 50:257–296Google Scholar
  21. Robert C, Asli D-K, Jonathan M (2009) Microfinance meets the market. J Econ Perspect 23(1):167–192Google Scholar
  22. Tanaka T, FC Colin, Nguyen Q (2010) Risk and time preferences: linking experimental and household survey data from vietnam. Am Econ Rev 100(1):557–571CrossRefGoogle Scholar
  23. Vanneman R, Noon J, Sen M, Desai S Shariff A (2006) Social networks in India: caste, tribe and religious variation. India human development survey working Paper No. 3, NCAER, University of MarilandGoogle Scholar
  24. Vellakkal S (2007) Health insurance scheme in India: an economic analysis of demand management under risk pooling and adverse selection. A thesis submitted to the University of Mangalore for award of the degree of Doctor of Philosophy in economicsGoogle Scholar

Copyright information

© Springer India 2014

Authors and Affiliations

  • Nina Takashino
    • 1
  • Keshav L. Maharjan
    • 2
  • Seiichi Fukui
    • 3
  1. 1.Tohoku UniversitySendaiJapan
  2. 2.Hiroshima UniversityHiroshimaJapan
  3. 3.Kyoto UniversityKyotoJapan

Personalised recommendations