Sumit Agarwal
National University of Singapore
Shashwat Alok
Indian School of Business, Hyderabad
Pulak Ghosh
IIM Bangalore
Soumya Ghosh
State Bank of India
Tomasz Piskorski
Columbia Business School
Working Paper
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Using administrative account level data, we study the largest financial inclusion program in India that led to 255 million new bank account openings. About 77% of these accounts maintain a positive balance. While the initial usage remains quite infrequent, it gradually converges to that of banked households with similar demographics. Exploiting regional variation in ex-ante financial access, we find that regions more exposed to the program saw an increase in lending and defaults on new loans. These results are consistent with banks catering to the new demand for formal credit by previously unbanked households. We also find some evidence of increased borrowing and spending for health related reasons in regions more exposed to the program.

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