Events
Seminar
Formal Finance, Poverty and Mental Health: Experimental Evidence from India
Speaker
Rohini Pande and Giorgia BarboniEvent date
शुक्र, 26 जुलाईVenue
Conference Room, Ground Floor, R&T Building, NIPFPAbstract
Formal Finance, Poverty and Mental Health: Experimental Evidence from India
We report on a nine-year long-run large-scale randomized controlled trial that evaluates the impact of Kshetriya Grameen Financial Services (KGFS), an Indian financial institution that offers rural poor a suite of financial products -- micro-credit, micro-savings and micro-insurance -- paired with financial advising. In three rural districts of Tamil Nadu, KGFS randomized choice of service area, creating 50 treatment and 50 control areas. Together, this covered 876 villages. This paper provides a set of core results based on household surveys covering a sample of 4,160 households.
Our paper shows that the arrival of a formal financial institution like KGFS in rural Tamil Nadu leads to a significant impact on poverty reduction, with income consistently improving across the entire household distribution in treated service areas. Moreover, the gains deriving from increased formal indebtedness do not come at the cost of additional mental pressure: treated women report improved decision-making as well as subjective well-being, while also showing a significant reduction in their levels of stress.