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

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dc.contributor.authorKanz, Martin
dc.date.accessioned2013-01-04T21:21:44Z
dc.date.available2013-01-04T21:21:44Z
dc.date.issued2012-11
dc.description.abstractThis 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.en
dc.identifierhttp://documents.worldbank.org/curated/en/2012/11/16920501/debt-relief-development-evidence-indias-bailout-program-highly-indebted-rural-households
dc.identifier.doi10.1596/1813-9450-6258
dc.identifier.urihttps://hdl.handle.net/10986/12110
dc.languageEnglish
dc.language.isoen_US
dc.relation.ispartofseriesPolicy Research Working Paper; No. 6258
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCESS TO CREDIT
dc.subjectACCESS TO FINANCE
dc.subjectACCESS TO FORMAL CREDIT
dc.subjectACCESS TO SAVINGS
dc.subjectAGRICULTURAL ACTIVITIES
dc.subjectAGRICULTURAL CREDIT
dc.subjectAGRICULTURAL DEBT
dc.subjectAGRICULTURAL LOANS
dc.subjectAGRICULTURAL SECTOR
dc.subjectAMOUNT OF DEBT
dc.subjectBAILOUT
dc.subjectBAILOUTS
dc.subjectBANK ACCOUNTS
dc.subjectBANK BRANCH
dc.subjectBANK BRANCHES
dc.subjectBANK CREDIT
dc.subjectBANK DEBT
dc.subjectBANK FINANCING
dc.subjectBANK LOAN
dc.subjectBANK LOANS
dc.subjectBANKRUPTCY
dc.subjectBANKRUPTCY DECISION
dc.subjectBANKRUPTCY LAWS
dc.subjectBANKRUPTCY REGULATION
dc.subjectBANKS
dc.subjectBENEFICIARIES
dc.subjectBENEFICIARY
dc.subjectBORROWER
dc.subjectBORROWER BEHAVIOR
dc.subjectBORROWING
dc.subjectCASH PAYMENTS
dc.subjectCASH TRANSFERS
dc.subjectCENTRAL BANK
dc.subjectCHECKS
dc.subjectCOLLATERAL
dc.subjectCOMMERCIAL BANK
dc.subjectCOMMERCIAL BANKS
dc.subjectCONDITIONAL DEBT
dc.subjectCONSUMER BANKRUPTCY
dc.subjectCONSUMER CREDIT
dc.subjectCONSUMPTION EXPENDITURES
dc.subjectCOOPERATIVE BANK
dc.subjectCOOPERATIVE BANKS
dc.subjectCOOPERATIVES
dc.subjectCORPORATE BORROWING
dc.subjectCORRUPTION
dc.subjectCREDIT CONSTRAINTS
dc.subjectCREDIT CONTRACT
dc.subjectCREDIT COOPERATIVE
dc.subjectCREDIT COOPERATIVES
dc.subjectCREDIT CULTURE
dc.subjectCREDIT EXPANSION
dc.subjectCREDIT MARKET
dc.subjectCREDIT MARKETS
dc.subjectCREDIT RATIONING
dc.subjectCREDIT RELATIONSHIP
dc.subjectCREDIT RELATIONSHIPS
dc.subjectCREDITOR
dc.subjectCREDITOR RIGHTS
dc.subjectCREDITORS
dc.subjectCREDITWORTHINESS
dc.subjectCROP LOAN
dc.subjectCROP LOANS
dc.subjectCROP VALUE
dc.subjectDEBT
dc.subjectDEBT BURDEN
dc.subjectDEBT CONTRACT
dc.subjectDEBT CONTRACTS
dc.subjectDEBT FORGIVENESS
dc.subjectDEBT HOLDERS
dc.subjectDEBT OVERHANG
dc.subjectDEBT RECOVERY
dc.subjectDEBT RELIEF
dc.subjectDEBT RESTRUCTURING
dc.subjectDEBT SERVICE
dc.subjectDEBTORS
dc.subjectDEBTS
dc.subjectDECLINE IN INVESTMENT
dc.subjectDEFAULTER
dc.subjectDEFAULTERS
dc.subjectDEFAULTS
dc.subjectDEPENDENT
dc.subjectDEVELOPING COUNTRIES
dc.subjectDISBURSEMENT
dc.subjectDISCRIMINATION
dc.subjectDUMMY VARIABLE
dc.subjectECONOMIC DECISIONS
dc.subjectEFFECT OF BANKRUPTCY
dc.subjectEFFECT OF DEBT
dc.subjectELIGIBILITY CRITERIA
dc.subjectELIGIBLE DEBT
dc.subjectEMERGING CREDIT
dc.subjectEMERGING ¸ MARKETS
dc.subjectENFORCEABILITY
dc.subjectENFORCEABILITY OF DEBT CONTRACTS
dc.subjectENFORCEMENT OF LOAN
dc.subjectENFORCEMENT OF LOAN CONTRACTS
dc.subjectEX-ANTE INCENTIVES
dc.subjectEXISTING CREDIT
dc.subjectEXISTING DEBT
dc.subjectEXPENDITURE
dc.subjectEXPENDITURES
dc.subjectEXTERNAL BORROWING
dc.subjectFACE VALUE
dc.subjectFARM LOANS
dc.subjectFARMER
dc.subjectFARMERS
dc.subjectFEDERAL RESERVE
dc.subjectFINANCIAL ACCESS
dc.subjectFINANCIAL INSTRUMENTS
dc.subjectFINANCIAL POSITION
dc.subjectFINANCIAL SERVICES
dc.subjectFINANCIAL SUPPORT
dc.subjectFINANCING REQUIREMENTS
dc.subjectFORMAL LENDING
dc.subjectFUTURE CREDIT
dc.subjectGENDER
dc.subjectGOVERNMENT INTERVENTIONS
dc.subjectHOUSEHOLD DEBT
dc.subjectHOUSEHOLD FINANCE
dc.subjectHOUSEHOLD INCOME
dc.subjectHOUSEHOLD INVESTMENT
dc.subjectHOUSEHOLD WEALTH
dc.subjectHOUSEHOLD WELFARE
dc.subjectHOUSEHOLDS
dc.subjectHUSBAND
dc.subjectIMPACT OF DEBT
dc.subjectINCOME SHOCKS
dc.subjectINDEBTED
dc.subjectINDEBTED HOUSEHOLDS
dc.subjectINDEBTEDNESS
dc.subjectINEQUALITY
dc.subjectINFORMAL CREDIT
dc.subjectINFORMAL FINANCING
dc.subjectINFORMAL LENDERS
dc.subjectINFORMAL LOANS
dc.subjectINFORMAL SECTOR LENDERS
dc.subjectINFORMATION ASYMMETRIES
dc.subjectINSTITUTIONAL CREDIT
dc.subjectINSTITUTIONAL LENDERS
dc.subjectINSURANCE
dc.subjectINTEREST RATE
dc.subjectINTEREST RATES
dc.subjectINTERNAL AUDITS
dc.subjectINTERNAL FINANCING
dc.subjectINTERNATIONAL BANK
dc.subjectINTERNATIONAL DEVELOPMENT
dc.subjectINVESTMENT BEHAVIOR
dc.subjectINVESTMENT CHOICE
dc.subjectINVESTMENT DECISION
dc.subjectINVESTMENT DECISIONS
dc.subjectINVESTMENT LOANS
dc.subjectINVESTMENT OPPORTUNITIES
dc.subjectINVESTMENT SPENDING
dc.subjectLAND HOLDING
dc.subjectLAND RECORDS
dc.subjectLANDOWNERS
dc.subjectLARGE DEBT
dc.subjectLEGAL REFORM
dc.subjectLENDER
dc.subjectLENDERS
dc.subjectLEVEL OF DEBT
dc.subjectLINE OF CREDIT
dc.subjectLIQUID ASSETS
dc.subjectLIQUIDITY
dc.subjectLIQUIDITY CONSTRAINTS
dc.subjectLOAN
dc.subjectLOAN AMOUNTS
dc.subjectLOAN APPLICATIONS
dc.subjectLOAN CATEGORY
dc.subjectLOAN CHARACTERISTICS
dc.subjectLOAN CONTRACTS
dc.subjectLOAN REPAYMENT
dc.subjectLOAN SIZE
dc.subjectLOANS FROM BANKS
dc.subjectLOANS FROM FRIENDS
dc.subjectLOCAL BANK
dc.subjectLOWER-INCOME BORROWERS
dc.subjectMARKET DISCIPLINE
dc.subjectMARKET DISTORTIONS
dc.subjectMARKET FAILURES
dc.subjectMICRO-ENTERPRISE
dc.subjectMICRO-ENTREPRENEURS
dc.subjectMICROCREDIT
dc.subjectMICROENTERPRISES
dc.subjectMICROFINANCE
dc.subjectMONEYLENDERS
dc.subjectMORAL HAZARD
dc.subjectNATIONAL DEBT
dc.subjectNEW BANK CREDIT
dc.subjectOUTSTANDING BALANCE
dc.subjectOUTSTANDING DEBT
dc.subjectOUTSTANDING LOANS
dc.subjectOVERDUE LOAN
dc.subjectOWNERSHIP STRUCTURE
dc.subjectPERSONAL BANKRUPTCY
dc.subjectPHYSICAL CAPITAL
dc.subjectPOLITICAL ECONOMY
dc.subjectPOVERTIES
dc.subjectPRIVATE CREDIT
dc.subjectPRODUCTIVE INVESTMENT
dc.subjectPRODUCTIVITY
dc.subjectPROTECTION OF CREDITOR
dc.subjectREPAYMENT
dc.subjectREPAYMENT DIFFICULTIES
dc.subjectREPAYMENT INCENTIVES
dc.subjectRESERVE BANK
dc.subjectRESIDUAL CLAIMANTS
dc.subjectRETURN
dc.subjectRETURNS
dc.subjectREVOLVING LINE OF CREDIT
dc.subjectRISK OF DEFAULT
dc.subjectRISK OF FRAUD
dc.subjectRURAL BANKS
dc.subjectRURAL CREDIT
dc.subjectSAVINGS ACCOUNTS
dc.subjectSETTLEMENT
dc.subjectSETTLEMENTS
dc.subjectSOCIAL BANKING
dc.subjectSOURCE OF INCOME
dc.subjectSOURCES OF CREDIT
dc.subjectSOVEREIGN DEBT
dc.subjectSUPPLY OF CREDIT
dc.subjectTOTAL DEBT
dc.subjectTRANSPARENCY
dc.subjectURBAN AREAS
dc.subjectVALUE OF DEBT
dc.subjectVILLAGE
dc.subjectVILLAGES
dc.subjectVOLATILE INCOMES
dc.titleWhat Does Debt Relief Do for Development? Evidence from India’s Bailout Program for Highly-Indebted Rural Householdsen
dspace.entity.typePublication
okr.associatedcontenthttps://openknowledge.worldbank.org/handle/10986/31093 Journal version
okr.crossref.titleWhat Does Debt Relief Do for Development? Evidence from India's Bailout Program for Highly-Indebted Rural Households
okr.date.disclosure2012-11-01
okr.date.doiregistration2025-04-10T11:08:36.825491Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2012/11/16920501/debt-relief-development-evidence-indias-bailout-program-highly-indebted-rural-households
okr.globalpracticeFinance and Markets
okr.globalpracticeTrade and Competitiveness
okr.guid589181468044056902
okr.identifier.doi10.1596/1813-9450-6258
okr.identifier.externaldocumentum000158349_20121106083533
okr.identifier.internaldocumentum16920501
okr.identifier.reportWPS6258
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/11/06/000158349_20121106083533/Rendered/PDF/wps6258.pdfen
okr.region.administrativeSouth Asia
okr.region.countryIndia
okr.topicFinance and Financial Sector Development::Debt Markets
okr.topicBanks & Banking Reform
okr.topicInternational Economics and Trade::External Debt
okr.topicFinance and Financial Sector Development::Access to Finance
okr.topicFinance and Financial Sector Development::Bankruptcy and Resolution of Financial Distress
okr.unitDevelopment Research Group (DECRG)
okr.volume1 of 1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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