Purpose -The objective of paper is to examine status of financial inclusion in India and study its determinants. Design/methodology/approach -Panel fixed effects and dynamic panel generalized methods of moments (GMM) methodologies have been applied to study determinants of financial inclusion. Additionally, Kendall's index of rank concordance has been derived to test for convergence of states in achieving financial inclusion. Findings -Branch network has unambiguous beneficial impact on financial inclusion. Both proportion of factories and employee base turn out to be significant determinants of penetration indicators. The findings reveal the importance of a region's socio-economic and environmental setup in shaping banking habit of masses. Using test for convergence it is found that regions tend to maintain their respective level of banking activity, with no support for closing gap. Originality/value -To the best of the author's knowledge, no panel data study has been performed for India based on data for large number of states and a reasonable time span. This study utilizes 29 major states and union territories encompassing 1995 to 2008, which helps to increase degree of freedom and provide reliable results. The study helps us to ascertain direction and strength of various causal factors in process offer policy makers' strategies, for improving financial inclusion.
We examine the efficiency-outreach debate in the context of Indian Micro Finance Institutions (MFIs). We employ the stochastic distance function approach for 75 MFIs during 2004-2011. We find that there are significant inefficiency effects but efficiency is improving over time. Among the determinants of inefficiency, average loan balance per borrower and number of women borrowers appear to improve efficiency. This suggests that the efficiency-outreach debate is more nuanced than is presented in the literature and depends on the way outreach is defined. Profitability, size and leverage seem to increase efficiency whereas age of the MFI is associated with higher inefficiency.
We examine whether professional money managers overreact to large climatic disasters. We find that managers within a major disaster region underweight disaster zone stocks to a much greater degree than distant managers and that this aversion to disaster zone stocks is related to a salience bias that decreases over time and distance from the disaster, rather than to superior information possessed by close managers. This overreaction can be costly to fund investors for some especially salient disasters like hurricanes and tornadoes: a long-short strategy that exploits the overreaction generates a significant DGTW-adjusted return over the following 2 years.
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