Affiliation:
1. School of Management Kristu Jayanti College Bangalore India
2. Centre for Economic Studies and Policy Institute for Social and Economic Change (ISEC) Bangalore India
3. Department of Humanities and Social Sciences Indian Institute of Technology Jammu India
Abstract
AbstractThough the relevance of grassroots institutions for financial inclusion (FI) is widely recognised, we still do not fully understand its differential effect on FI, particularly in relation to commercial banks. To investigate this issue, we consider the household's moneylender dependence as an indicator of financial exclusion and thus our outcome variable. Further, we have developed FI indices using indicators of commercial and cooperative banks, which we used as explanatory variables in our analysis. Our results show that, while there is a decreased dependence on moneylenders even at low levels of FI through cooperatives, commercial banks show an inverted U‐shaped relationship implying a decreasing effect only after a threshold level.