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

• 成果类型: Article
• 署名作者: Kanz, Martin
• 署名单位: The World Bank
• 刊物名称: AMERICAN ECONOMIC JOURNAL-APPLIED ECONOMICS
• ISSN/ISSBN: 1945-7782
• DOI: 10.1257/app.20130399
• 发表日期: 2016
• 页码: 66-99
• 关键词: personal bankruptcy; consumer bankruptcy; field experiment; fresh start; credit; constraints; determinants; CHOICE; RISK

摘要

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.