Do the heterogeneous determinants of life satisfaction affect differently across borrowers of diverse credit sources? A propensity score approach

Tiken Das and Manesh Choubey

International Journal of Social Economics, 2018, vol. 45, issue 8, 1142-1158

Abstract: Purpose - The purpose of this paper is to evaluate the non-monetary effect of credit access by providing an econometric framework which controls the problem of selection bias. Design/methodology/approach - The study is conducted in Assam, India and uses a quasi-experiment design to gather primary data. The ordered probit model is used to evaluate the non-monetary impact of credit access. The paper uses a propensity score approach to check the robustness of the ordered probit model. Findings - The study confirms the positive association of credit access to life satisfaction of borrowers. It is found that, in general, rural borrower’s life satisfaction is influenced by the ability and capacity to work, the value of physical assets of the borrowers as well as some other lenders’ and borrowers’ specific factors. But, the direction of causality of the factors influencing borrowers’ life satisfaction is remarkably different across credit sources. Research limitations/implications - The study argues to provide productive investment opportunities to semiformal and informal borrowers while improving their life satisfaction score. Although the results are adjusted for selection and survivorship biases, it is impossible with the available data to assess which non-income factors explain the findings, and therefore this limitation is left to future research. Originality/value - The study contributes to the literature of rural credit by assessing the probable differences among formal, semiformal and informal credit sources with respect to non-monetary impacts.

Keywords: Life satisfaction; Selection bias; Ordered probit; Propensity score; Rural credit (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijsepp:ijse-03-2017-0081

DOI: 10.1108/IJSE-03-2017-0081

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