Seminar by Sandhya Garg (Institute of Economic Growth)

This paper examines a widespread belief that marginalized social groups could be lagging behind in terms of entrepreneurial activities in rural areas in the process of development and tests whether better financial access can mitigate the differences across social identities in enabling sectoral mobility. Using a novel dataset of Indian villages on distance to bank branches, we estimate that proximity to a bank branch improves entrepreneurship of under-privileged caste groups in India in the non-agricultural sector and those sectors which have been dominated by the upper caste groups. We further find that this effect is mediated by uptake of institutional/formal credit by lower caste groups. Our results show whether financial inclusion can break rigid social norms around caste and occupation in India.