Does a Debt Relief Lead to Increased Precautionary Savings?: Evidence from A Policy Experiment

Mishra, M and Venkatesh, R and Tantri, P L and Thota, N (2016) Does a Debt Relief Lead to Increased Precautionary Savings?: Evidence from A Policy Experiment. Working Paper. Indian School of Business. (Unpublished)

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Abstract

Using official national-level survey data, we investigate the impact of a large debt waiver program in India on beneficiaries savings and consumption. We find that the household consumption level and pattern are unaffected by the waiver. Plausibly anticipating higher credit constraints in the post-waiver period, the households increase precautionary savings as represented by increased investment in jewelry. The arbitrary program eligibility cut-off, defined in terms of landholdings, allows us to employ a robust regression discontinuity design. We perform several placebo and robustness tests in order to rule out alternative explanations.

Affiliation: Indian School of Business
ISB Creiators:
ISB Creators
ORCiD
Mishra, M
UNSPECIFIED
Venkatesh, R
UNSPECIFIED
Tantri, P L
UNSPECIFIED
Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Consumption and Savings, Governmental policy and Regulation, Banks, Bankruptcy, Political economy
Subjects: Economics
Finance
Depositing User: Ilayaraja M
Date Deposited: 01 Jul 2019 19:20
Last Modified: 01 Jul 2019 19:20
URI: http://eprints.exchange.isb.edu/id/eprint/1209
Publisher URL: http://dx.doi.org/10.2139/ssrn.2729653
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