Does Political Identity Matter in Rural Borrowing? Evidence from a Field Survey

Abstract

This study is based on a primary survey conducted over two consecutive years in two villages in the North 24 Parganas district of West Bengal, India. West Bengal has the unique feature of being under a single coalition government for the last 30 years. In this context, we examine the effect of different socioeconomic, political and demographic borrower characteristics on the probability of taking a loan from formal sources and the size of such loans taken. We find that political identity significantly affects the borrowers’ access to the formal loan market. Other factors that are significant in characterising the formal borrowers are occupational categories, landholding and religious status.