Files in English

English PDF (1.74 MB)
619 downloads

Date

2016-10

ISSN

Published

2016-10

Author(s)

Kanz, Martin

Abstract

This paper studies the impact of debt relief, using a natural experiment arising from India's "Agricultural Debt Waiver and Debt Relief Scheme," one of the largest household-level debt relief initiatives in history. I find that debt relief has a substantial impact on household balance sheets, but does not affect savings, consumption and investment, as predicted by theories of debt overhang or balance sheet distress. Instead, debt relief leads to greater reliance on informal credit, reduced investment, and lower agricultural productivity. Consistent with moral hazard generated by the bailout, beneficiaries are significantly less concerned about the reputational consequences of future default.

URI

http://hdl.handle.net/10986/31093

Report Series

Other publications in this report series

Journal

Journal Volume

Journal Issue

Collections

C. Journal articles published externally

Associated URLs

Associated content

Working paper version (pre-print)

Citations

• Cited 17 times in Scopus (View citations)