JUE insight: Infrastructure and Finance: Evidence from India’s GQ highway network

Abhiman Das, Ejaz Ghani (), Arti Grover, William Kerr and Ramana Nanda

Journal of Urban Economics, 2024, vol. 142, issue C

Abstract: We use data from Reserve Bank of India to study the impact of India’s Golden Quadrilateral (GQ) highway project on finance-dependent activity. Loan volumes increase by 20%–30% in districts along GQ and are stronger in industries more dependent upon external finance. Loan growth begins with increases in average branch size and in places with more pre-GQ loan activity. New branch openings come later, consistent with short-run adjustment costs to expanding branch networks. These patterns are not evident in placebo tests using delayed investments in NS-EW highways. Results suggest the depth of initial financial infrastructure shapes how infrastructure investments impact localities.

Keywords: Infrastructure; Highways; Banking; Finance; Development; India (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:142:y:2024:i:c:s0094119023000633

DOI: 10.1016/j.jue.2023.103593

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