What Works Best for the Poor in Rural India

Atul Mehta and Joysankar Bhattacharya

South Asia Economic Journal, 2017, vol. 18, issue 2, 230-245

Abstract: Financial sector development serves poor directly through poverty-lending approach or financial systems approach. Robinson (2001) questions the appropriateness of poverty-lending approach for the extremely poor and supports the financial systems approach for providing a poverty alleviation toolbox to serve the poor at various levels. The present study attempts to assess the effectiveness of the two lending approaches and comments on the appropriateness of the same for the poor and the poorest of the poor in rural India using state-wise annual data from 1999–2000 to 2011–2012. We conduct a panel data analysis for a sample of 15 major Indian states and provide an empirical evidence for the effect of various poverty alleviation tools on the poor and the poorest of the poor in rural India. The study partially supports the use of tools suggested by Robinson.

Keywords: Financial sector development; poverty; inequality; bank credit; microcredit; economic growth (search for similar items in EconPapers)
JEL-codes: G21 O16 O18 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:sae:soueco:v:18:y:2017:i:2:p:230-245

DOI: 10.1177/1391561417713131

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