Publications
Publications
- 2008
- HBS Working Paper Series
Fixing Market Failures or Fixing Elections? Agricultural Credit in India
By: Shawn A. Cole
Abstract
This paper integrates theories of political budget cycles with theories of tactical electoral redistribution to test for political capture in a novel way. Studying banks in India, I find that government-owned bank lending tracks the electoral cycle, with agricultural credit increasing by 5-10 percentage points in an election year. There is significant cross-sectional targeting, with large increases in districts in which the election is particularly close. This targeting does not occur in non-election years, or in private bank lending. I show capture is costly: elections affect loan repayment, and election year credit booms do not measurably affect agricultural output.
Keywords
Agribusiness; Banks and Banking; Financing and Loans; Political Elections; State Ownership; Banking Industry; India
Citation
Cole, Shawn A. "Fixing Market Failures or Fixing Elections? Agricultural Credit in India." Harvard Business School Working Paper, No. 09-001, July 2008.
About The Author
