Cultural Proximity and Loan Outcomes

Raymond Fisman, Daniel Paravisini () and Vikrant Vig

Working Papers from eSocialSciences

Abstract: Evidence is presented to show that shared codes, religious beliefs, ethnicity - cultural proximity - between lenders and borrowers improves the efficiency of credit allocation. In-group preferential treatment is identified using dyadic data on the religion and caste of bank officers and borrowers from a bank in India, and a rotation policy that induces exogenous matching between officers and borrowers. Cultural proximity increases lending on both intensive and extensive margins and improves repayment performance, even after the in-group officer is replaced by an out-group one. Further, cultural proximity increases loan dispersion and reduces loan to collateral ratios. [BREAD Working Paper No. 345]. URL:[http://ipl.econ.duke.edu/bread/papers/working/345.pdf]

Keywords: India; Caste; Religion; Lending discrimination; finance; religious beliefs; ethnicity; cultural proximity; lenders; borrowers; bank; credit allocation; financial constraints; loan (search for similar items in EconPapers)
Date: 2012-07
Note: Institutional Papers
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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Related works:
Journal Article: Cultural Proximity and Loan Outcomes (2017)
Working Paper: Cultural proximity and loan outcomes (2017)
Working Paper: Cultural proximity and loan outcomes (2016)
Working Paper: Cultural Proximity and Loan Outcomes (2012)
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