Contagious Effects of a Political Intervention in Debt Contracts: Evidence Using Loan-Level Data

Tantri, P L (2018) Contagious Effects of a Political Intervention in Debt Contracts: Evidence Using Loan-Level Data. The Review of Financial Studies, 31 (11). pp. 4556-4592.

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Abstract

Using an unexpected government regulation that restricted the ability of microfinance institutions to recover loans in one Indian state, I examine whether this intervention affected bank loan performance. The bank loan delinquency rate significantly increased as a result. In response, the ex post bank credit supply declined by more than half. For identification, I compare loans from branches located in regions subject to this intervention with loans from nearby branches of the same bank located in regions not subject to the intervention. I conclude that political interventions in credit markets could have significant spillover effects.

Affiliation: Indian School of Business
ISB Creators:
ISB CreatorsORCiD
Tantri, P LUNSPECIFIED
Item Type: Article
Uncontrolled Keywords: Political Intervention, Bank Loan Performance
Subjects: Finance
Finance > Financial Institutions
Depositing User: Veeramani R
Date Deposited: 04 Jan 2019 13:29
Last Modified: 01 Jul 2019 17:05
URI: http://eprints.exchange.isb.edu/id/eprint/652
Publisher URL: http://dx.doi.org/10.1093/rfs/hhy001
Publisher OA policy: http://www.sherpa.ac.uk/romeo/issn/0893-9454/
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