Roads and loans

Argawal, S, Mukherjee, A and Naaraayanan, L (2023) Roads and loans. Review of Financial Studies, 36 (4). pp. 1508-1547. ISSN 0893-9454 OPEN ACCESS


Does 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 an infrastructure program that brought road access to unconnected Indian villages. This program prioritized roads for villages above specific population thresholds, allowing us to exploit the resultant discontinuities for identification. Using detailed data from a large bank, we find that 75% more villagers get loans, and the average amount lent to them is 30%–35% higher, in villages just above these thresholds. District-level analyses further suggest that roads and loans are complements in the growth process.

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Item Type: Article
Subject Areas: Finance
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This is a pre-copyedited, author-produced version of an article accepted for publication in The Review of Financial Studies following peer review. The version of record: Sumit Agarwal, Abhiroop Mukherjee, S Lakshmi Naaraayanan, Roads and Loans, The Review of Financial Studies, 2022;, hhac053,
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Date Deposited: 10 Oct 2022 10:36
Date of first compliant deposit: 03 Oct 2022
Subjects: Growth
Last Modified: 19 Jul 2024 01:46

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