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

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collection.link.5
https://openknowledge.worldbank.org/handle/10986/9
collection.name.5
Policy Research Working Papers
dc.contributor.author
Kanz, Martin
dc.date.accessioned
2013-01-04T21:21:44Z
dc.date.available
2013-01-04T21:21:44Z
dc.date.issued
2012-11
dc.date.lastModified
2021-04-23T14:02:59Z
dc.description.abstract
This 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.identifier
http://documents.worldbank.org/curated/en/2012/11/16920501/debt-relief-development-evidence-indias-bailout-program-highly-indebted-rural-households
dc.identifier.uri
http://hdl.handle.net/10986/12110
dc.language
English
dc.language.iso
en_US
dc.relation.ispartofseries
Policy Research Working Paper; No. 6258
dc.rights
CC BY 3.0 IGO
dc.rights.holder
World Bank
dc.rights.uri
http://creativecommons.org/licenses/by/3.0/igo/
dc.subject
ACCESS TO CREDIT
dc.subject
ACCESS TO FINANCE
dc.subject
ACCESS TO FORMAL CREDIT
dc.subject
ACCESS TO SAVINGS
dc.subject
AGRICULTURAL ACTIVITIES
dc.subject
AGRICULTURAL CREDIT
dc.subject
AGRICULTURAL DEBT
dc.subject
AGRICULTURAL LOANS
dc.subject
AGRICULTURAL SECTOR
dc.subject
AMOUNT OF DEBT
dc.subject
BAILOUT
dc.subject
BAILOUTS
dc.subject
BANK ACCOUNTS
dc.subject
BANK BRANCH
dc.subject
BANK BRANCHES
dc.subject
BANK CREDIT
dc.subject
BANK DEBT
dc.subject
BANK FINANCING
dc.subject
BANK LOAN
dc.subject
BANK LOANS
dc.subject
BANKRUPTCY
dc.subject
BANKRUPTCY DECISION
dc.subject
BANKRUPTCY LAWS
dc.subject
BANKRUPTCY REGULATION
dc.subject
BANKS
dc.subject
BENEFICIARIES
dc.subject
BENEFICIARY
dc.subject
BORROWER
dc.subject
BORROWER BEHAVIOR
dc.subject
BORROWING
dc.subject
CASH PAYMENTS
dc.subject
CASH TRANSFERS
dc.subject
CENTRAL BANK
dc.subject
CHECKS
dc.subject
COLLATERAL
dc.subject
COMMERCIAL BANK
dc.subject
COMMERCIAL BANKS
dc.subject
CONDITIONAL DEBT
dc.subject
CONSUMER BANKRUPTCY
dc.subject
CONSUMER CREDIT
dc.subject
CONSUMPTION EXPENDITURES
dc.subject
COOPERATIVE BANK
dc.subject
COOPERATIVE BANKS
dc.subject
COOPERATIVES
dc.subject
CORPORATE BORROWING
dc.subject
CORRUPTION
dc.subject
CREDIT CONSTRAINTS
dc.subject
CREDIT CONTRACT
dc.subject
CREDIT COOPERATIVE
dc.subject
CREDIT COOPERATIVES
dc.subject
CREDIT CULTURE
dc.subject
CREDIT EXPANSION
dc.subject
CREDIT MARKET
dc.subject
CREDIT MARKETS
dc.subject
CREDIT RATIONING
dc.subject
CREDIT RELATIONSHIP
dc.subject
CREDIT RELATIONSHIPS
dc.subject
CREDITOR
dc.subject
CREDITOR RIGHTS
dc.subject
CREDITORS
dc.subject
CREDITWORTHINESS
dc.subject
CROP LOAN
dc.subject
CROP LOANS
dc.subject
CROP VALUE
dc.subject
DEBT
dc.subject
DEBT BURDEN
dc.subject
DEBT CONTRACT
dc.subject
DEBT CONTRACTS
dc.subject
DEBT FORGIVENESS
dc.subject
DEBT HOLDERS
dc.subject
DEBT OVERHANG
dc.subject
DEBT RECOVERY
dc.subject
DEBT RELIEF
dc.subject
DEBT RESTRUCTURING
dc.subject
DEBT SERVICE
dc.subject
DEBTORS
dc.subject
DEBTS
dc.subject
DECLINE IN INVESTMENT
dc.subject
DEFAULTER
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DEFAULTERS
dc.subject
DEFAULTS
dc.subject
DEPENDENT
dc.subject
DEVELOPING COUNTRIES
dc.subject
DISBURSEMENT
dc.subject
DISCRIMINATION
dc.subject
DUMMY VARIABLE
dc.subject
ECONOMIC DECISIONS
dc.subject
EFFECT OF BANKRUPTCY
dc.subject
EFFECT OF DEBT
dc.subject
ELIGIBILITY CRITERIA
dc.subject
ELIGIBLE DEBT
dc.subject
EMERGING CREDIT
dc.subject
EMERGING ¸ MARKETS
dc.subject
ENFORCEABILITY
dc.subject
ENFORCEABILITY OF DEBT CONTRACTS
dc.subject
ENFORCEMENT OF LOAN
dc.subject
ENFORCEMENT OF LOAN CONTRACTS
dc.subject
EX-ANTE INCENTIVES
dc.subject
EXISTING CREDIT
dc.subject
EXISTING DEBT
dc.subject
EXPENDITURE
dc.subject
EXPENDITURES
dc.subject
EXTERNAL BORROWING
dc.subject
FACE VALUE
dc.subject
FARM LOANS
dc.subject
FARMER
dc.subject
FARMERS
dc.subject
FEDERAL RESERVE
dc.subject
FINANCIAL ACCESS
dc.subject
FINANCIAL INSTRUMENTS
dc.subject
FINANCIAL POSITION
dc.subject
FINANCIAL SERVICES
dc.subject
FINANCIAL SUPPORT
dc.subject
FINANCING REQUIREMENTS
dc.subject
FORMAL LENDING
dc.subject
FUTURE CREDIT
dc.subject
GENDER
dc.subject
GOVERNMENT INTERVENTIONS
dc.subject
HOUSEHOLD DEBT
dc.subject
HOUSEHOLD FINANCE
dc.subject
HOUSEHOLD INCOME
dc.subject
HOUSEHOLD INVESTMENT
dc.subject
HOUSEHOLD WEALTH
dc.subject
HOUSEHOLD WELFARE
dc.subject
HOUSEHOLDS
dc.subject
HUSBAND
dc.subject
IMPACT OF DEBT
dc.subject
INCOME SHOCKS
dc.subject
INDEBTED
dc.subject
INDEBTED HOUSEHOLDS
dc.subject
INDEBTEDNESS
dc.subject
INEQUALITY
dc.subject
INFORMAL CREDIT
dc.subject
INFORMAL FINANCING
dc.subject
INFORMAL LENDERS
dc.subject
INFORMAL LOANS
dc.subject
INFORMAL SECTOR LENDERS
dc.subject
INFORMATION ASYMMETRIES
dc.subject
INSTITUTIONAL CREDIT
dc.subject
INSTITUTIONAL LENDERS
dc.subject
INSURANCE
dc.subject
INTEREST RATE
dc.subject
INTEREST RATES
dc.subject
INTERNAL AUDITS
dc.subject
INTERNAL FINANCING
dc.subject
INTERNATIONAL BANK
dc.subject
INTERNATIONAL DEVELOPMENT
dc.subject
INVESTMENT BEHAVIOR
dc.subject
INVESTMENT CHOICE
dc.subject
INVESTMENT DECISION
dc.subject
INVESTMENT DECISIONS
dc.subject
INVESTMENT LOANS
dc.subject
INVESTMENT OPPORTUNITIES
dc.subject
INVESTMENT SPENDING
dc.subject
LAND HOLDING
dc.subject
LAND RECORDS
dc.subject
LANDOWNERS
dc.subject
LARGE DEBT
dc.subject
LEGAL REFORM
dc.subject
LENDER
dc.subject
LENDERS
dc.subject
LEVEL OF DEBT
dc.subject
LINE OF CREDIT
dc.subject
LIQUID ASSETS
dc.subject
LIQUIDITY
dc.subject
LIQUIDITY CONSTRAINTS
dc.subject
LOAN
dc.subject
LOAN AMOUNTS
dc.subject
LOAN APPLICATIONS
dc.subject
LOAN CATEGORY
dc.subject
LOAN CHARACTERISTICS
dc.subject
LOAN CONTRACTS
dc.subject
LOAN REPAYMENT
dc.subject
LOAN SIZE
dc.subject
LOANS FROM BANKS
dc.subject
LOANS FROM FRIENDS
dc.subject
LOCAL BANK
dc.subject
LOWER-INCOME BORROWERS
dc.subject
MARKET DISCIPLINE
dc.subject
MARKET DISTORTIONS
dc.subject
MARKET FAILURES
dc.subject
MICRO-ENTERPRISE
dc.subject
MICRO-ENTREPRENEURS
dc.subject
MICROCREDIT
dc.subject
MICROENTERPRISES
dc.subject
MICROFINANCE
dc.subject
MONEYLENDERS
dc.subject
MORAL HAZARD
dc.subject
NATIONAL DEBT
dc.subject
NEW BANK CREDIT
dc.subject
OUTSTANDING BALANCE
dc.subject
OUTSTANDING DEBT
dc.subject
OUTSTANDING LOANS
dc.subject
OVERDUE LOAN
dc.subject
OWNERSHIP STRUCTURE
dc.subject
PERSONAL BANKRUPTCY
dc.subject
PHYSICAL CAPITAL
dc.subject
POLITICAL ECONOMY
dc.subject
POVERTIES
dc.subject
PRIVATE CREDIT
dc.subject
PRODUCTIVE INVESTMENT
dc.subject
PRODUCTIVITY
dc.subject
PROTECTION OF CREDITOR
dc.subject
REPAYMENT
dc.subject
REPAYMENT DIFFICULTIES
dc.subject
REPAYMENT INCENTIVES
dc.subject
RESERVE BANK
dc.subject
RESIDUAL CLAIMANTS
dc.subject
RETURN
dc.subject
RETURNS
dc.subject
REVOLVING LINE OF CREDIT
dc.subject
RISK OF DEFAULT
dc.subject
RISK OF FRAUD
dc.subject
RURAL BANKS
dc.subject
RURAL CREDIT
dc.subject
SAVINGS ACCOUNTS
dc.subject
SETTLEMENT
dc.subject
SETTLEMENTS
dc.subject
SOCIAL BANKING
dc.subject
SOURCE OF INCOME
dc.subject
SOURCES OF CREDIT
dc.subject
SOVEREIGN DEBT
dc.subject
SUPPLY OF CREDIT
dc.subject
TOTAL DEBT
dc.subject
TRANSPARENCY
dc.subject
URBAN AREAS
dc.subject
VALUE OF DEBT
dc.subject
VILLAGE
dc.subject
VILLAGES
dc.subject
VOLATILE INCOMES
dc.title
What Does Debt Relief Do for Development? Evidence from India’s Bailout Program for Highly-Indebted Rural Households
en
okr.associatedcontent
https://openknowledge.worldbank.org/handle/10986/31093 Journal version
okr.date.disclosure
2012-11-01
okr.doctype
Publications & Research :: Policy Research Working Paper
okr.doctype
Publications & Research
okr.docurl
http://documents.worldbank.org/curated/en/2012/11/16920501/debt-relief-development-evidence-indias-bailout-program-highly-indebted-rural-households
okr.globalpractice
Finance and Markets
okr.globalpractice
Trade and Competitiveness
okr.googlescholar.linkpresent
yes
okr.identifier.doi
10.1596/1813-9450-6258
okr.identifier.externaldocumentum
000158349_20121106083533
okr.identifier.internaldocumentum
16920501
okr.identifier.report
WPS6258
okr.language.supported
en
okr.pdfurl
http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/11/06/000158349_20121106083533/Rendered/PDF/wps6258.pdf
en
okr.region.administrative
South Asia
okr.region.country
India
okr.topic
Finance and Financial Sector Development :: Debt Markets
okr.topic
Banks & Banking Reform
okr.topic
International Economics and Trade :: External Debt
okr.topic
Finance and Financial Sector Development :: Access to Finance
okr.topic
Finance and Financial Sector Development :: Bankruptcy and Resolution of Financial Distress
okr.unit
Development Research Group (DECRG)
okr.volume
1 of 1

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