Kanz, MartinGine, Xavier2014-12-042014-12-042014-11https://hdl.handle.net/10986/20656This paper studies the credit market implications and real effects of one the largest borrower bailout programs in history, enacted by the government of India against the backdrop of the 2008-2009 financial crisis. The study finds that the stimulus program had no effect on productivity, wages, or consumption, but led to significant changes in credit allocation and an increase in defaults. Post-program loan performance declines faster in districts with greater exposure to the program, an effect that is not driven by greater risk-taking of banks. Loan defaults become significantly more sensitive to the electoral cycle after the program, suggesting the anticipation of future credit market interventions as an important channel through which moral hazard in loan repayment is intensified.en-USCC BY 3.0 IGOACCESS TO CREDITACCESS TO EXTERNAL FINANCEACCOUNTINGADMINISTRATIVE BODYAFFORDABILITYAGRICULTURAL CREDITAGRICULTURAL DEBTAGRICULTURAL LOANSAGRICULTURAL SECTORAGRICULTUREALLOCATION OF CREDITAMOUNT OF CREDITAMOUNT OF DEBTASSETSAUDITSBAD DEBTSBAILOUTBAILOUTSBALANCE SHEETBALANCE SHEETSBANK BAILOUTSBANK BRANCHBANK BRANCHESBANK CREDITBANK LENDINGBANK LIQUIDITYBANK POLICYBANKING REGULATIONSBASE YEARBENCHMARKBENEFICIARIESBENEFICIARYBORROWERBORROWER BEHAVIORBORROWINGBRANCH BANKINGBUDGET DEFICITSBUSINESS CYCLESCDCENTRAL BANKCHECKSCOLLATERALCOMMERCIAL BANKSCOMMODITY PRICESCONDITIONAL DEBTCONSUMER CREDITCONSUMER CREDIT CARDCONSUMERSCONSUMPTION EXPENDITURECORRUPTIONCOST OF DEBTCOSTS OF CREDITCREDIT ALLOCATIONCREDIT CONTRACTSCREDIT CULTURECREDIT DISCIPLINECREDIT LOSSESCREDIT MARKETCREDIT MARKETSCREDIT OUTSTANDINGCREDIT RATIONINGCREDIT SPREADSCREDITSDEBTDEBT CONTRACTSDEBT LEVELSDEBT OVERHANGDEBT RELIEFDEBT RESTRUCTURINGDEBTSDEFAULT RATESDEFAULTERSDEFAULTSDEPENDENTDEVELOPMENT POLICYDISTRIBUTION OF CREDITDUMMY VARIABLEDUMMY VARIABLESDURABLEECONOMIC ACTIVITYECONOMIC CRISISECONOMIC HISTORYECONOMIC OUTCOMESECONOMIC PERFORMANCEECONOMIC POLICYECONOMIC SHOCKSECONOMIC TRENDSEFFECT OF DEBTELASTICITYELIGIBILITY CRITERIAELIGIBLE BORROWERSEMERGING MARKETEMERGING MARKETSEMPLOYMENTEVERGREENINGEXCLUSIONEXISTING CREDITEXTERNAL FINANCEEXTERNAL FINANCINGFARM LOANSFARMERSFINANCIAL ASSISTANCEFINANCIAL CONSTRAINTSFINANCIAL CRISISFINANCIAL DEVELOPMENTFINANCIAL INTERMEDIARIESFINANCIAL INTERMEDIATIONFINANCIAL SECTORFINANCIAL SHOCKSFORECLOSUREFORECLOSURESFUTURE CREDITGDPGOVERNMENT INTERVENTIONGOVERNMENT SPENDINGHOME EQUITYHOUSEHOLD DEBTHOUSEHOLD DEBTSHOUSEHOLDSHOUSINGIMPACT OF DEBTINDEBTEDINDEBTEDNESSINSTITUTIONAL CREDITINSTITUTIONAL ENVIRONMENTINSTITUTIONAL ENVIRONMENTSINSTRUMENTINTERNATIONAL BANKKEY CHALLENGELABOR MARKETLAND HOLDINGSLAND REFORMSLAND TENURELEGISLATIONLENDERSLENDING POLICIESLEVERAGELOANLOAN DEFAULTSLOAN DELINQUENCIESLOAN PAYMENTSLOAN PERFORMANCELOAN REPAYMENTLOAN SIZELOAN SIZESLOCAL BANKLOCAL BUSINESSMACROECONOMICSMANDATEMARKET CONDITIONSMARKET DATAMARKET FAILURESMETROPOLITAN AREASMICRO-DATAMICRODATAMONETARY VALUESMORAL HAZARDMORTGAGEMORTGAGE DEBTMORTGAGE HOLDERSMORTGAGE MARKETMORTGAGESNEW CREDITNON-PERFORMING LOANNON-PERFORMING LOANSNPLPENALTIESPOLICY RESPONSEPOLITICAL ECONOMYPOSITIVE EFFECTSPRODUCTIVE INVESTMENTPRODUCTIVE INVESTMENTSPRODUCTIVITYRECAPITALIZATIONRECAPITALIZATIONSRECESSIONSREGIONAL RURAL BANKSREINVESTMENTRENEGOTIATIONREPAYMENT CAPACITYRESERVERESERVE BANKRESERVE BANK OF INDIARESTRUCTURING PROGRAMRESTRUCTURING PROGRAMSRETURNSRURAL BANKSRURAL CREDITSETTLEMENTSETTLEMENTSSHARE OF CREDITSHARE OF DEBTSHORT MATURITYSOCIAL BANKINGSOURCE OF CREDITSOURCE OF INFORMATIONSTATE BANKSSUPPLY OF CREDITTAXTAX CODETOTAL REVENUETRANSPARENCYUNIONVOTERSWAGES10.1596/1813-9450-7109