Repayment in microfinance: The Role of financial literacy and caste

Rashmi Baura () and Renuka Sane
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Rashmi Baura: Jawharlal Nehru University

Discussion Papers from Indian Statistical Institute, Delhi

Abstract: We evaluate the impact of a mandatory lnancial education program on female customers of an urban micro-lnance institution (MFI) headquartered in Mumbai, India. We exploit the variation in timing of the lnancial literacy program across the branches to identify if there was an improvement in the loan repayment performance. Our results suggest that lnancial literacy led to a decline in the total number of days taken to make loan repayments as well as the number of months in which the repayment was late. More importantly, lnancial education helped those in homogeneous groups of reserved castes overcome their initial disadvantage of low lnancial literacy relative to those in mixed caste groups.

Pages: 26 pages
Date: 2014-05
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