Do institutional transplants succeed? Regulating raiffeisen cooperatives in South India, 1930-1960

Maanik Nath

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The government in British-ruled India established cooperative banks to compete with private moneylenders in the rural credit market. State officials expected greater competition to increase the supply of low-cost credit, thereby expanding investment potential for the rural poor. Cooperatives did increase credit supply but captured a small share of the credit market and reported net losses throughout the late colonial and early postcolonial period. The article asks why this experiment did not succeed and offers two explanations. First, low savings restricted the role of social capital and mutual supervision as methods of financial regulation in the cooperative sector. Second, a political-economic ideology that privileged equity over efficiency made for weak administrative regulation.

Keywords: agriculture; colonialism; India; institutional change; rural banking (search for similar items in EconPapers)
JEL-codes: N25 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2021-03
New Economics Papers: this item is included in nep-fdg, nep-his and nep-hme
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Citations: View citations in EconPapers (1)

Published in Business History Review, March, 2021, 95(1), pp. 59 - 85. ISSN: 0007-6805

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