Replication data for: What Does Debt Relief Do for Development? Evidence from India's Bailout for Rural Households

Principal Investigator(s): View help for Principal Investigator(s) Martin Kanz

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Project Citation:

Kanz, Martin. Replication data for: What Does Debt Relief Do for Development? Evidence from India’s Bailout for Rural Households. Nashville, TN: American Economic Association [publisher], 2016. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-07. https://doi.org/10.3886/E116332V1

Project Description

Summary: 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.

Scope of Project

JEL Classification:
      D14 Household Saving; Personal Finance
      G28 Financial Institutions and Services: Government Policy and Regulation
      O12 Microeconomic Analyses of Economic Development
      O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
      O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
      Q14 Agricultural Finance
      Q18 Agricultural Policy; Food Policy

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V1 [2019-12-07]

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