Partition, Migration, and Jute Cultivation in India

We examine investment in bank branches on the Indian subcontinent in 1939 and 1946. In 1947, the states of India and Pakistan were created from the erstwhile colony of British India. Partition was destabilizing to both economies. We use branch expansion as a proxy for entrepreneur's pre‐partition predictions of the future of these regions. Our results indicate there were no premonitions of economic dislocation. Banks tended to deepen their presence in regions which were already developed. But controlling for the level of 1931 development, branch placement was highest in exactly those regions, Bengal and the Punjab, which were to experience the greatest negative consequences from political division. After 1947, multiple banks failed; most failing banks were registered in the Punjab or Bengal region. In United India, businessmen saw as much promise in regions which were to become Pakistan as in regions which were to become India. After partition, the Pakistan regions were immediately more economically fragile. This event provides a general lesson. Economic integration had intensified over the years of British rule. The abrupt stop to integration harmed especially the smaller, less diversified region. Politicians should be wary of politically dividing regions which have evolved to function as integrated economic units.

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“…https://orcid.org/0000-0002-3932-7700 ENDNOTES 1 Bharadwaj and Fenske (2012) examine the effect of partition on the jute market.…”

Section: Susan Wolcottmentioning

confidence: 99%

Anticipating independence, no premonition of partition. The lessons of bank branch expansion on the Indian subcontinent, 1939 to 1946

Nguyen

Wolcott

2020

Rev Financ Econ

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“…was based on differential economic and/or educational outcomes. The border was drawn ostensibly along religious lines(Bharadwaj et al 2008;Bharadwaj and Fenske 2012). It is well known that the Muslim majority provinces of pre-partition India towards the North-West and West were demanded as a separate homeland for Muslims by the political party Muslim League.…”

mentioning

confidence: 99%

“…It is well known that the Muslim majority provinces of pre-partition India towards the North-West and West were demanded as a separate homeland for Muslims by the political party Muslim League. In fact, distance from the border has been used as an instrument for research on agricultural productivity of migrants(Bharadwaj and Fenske 2012) which suggests that economic outcomes of interest such as productivity and individual ability are exogenous to distance from the border that was carved in 1947.Another minor point of concern could be that the differential rate of migration across different districts is driving the results. For instance, the district of Karachi is an outlier in the sense that it has more than 20% of its population classified as migrants in my sample Bharadwaj et al (2008).…”

mentioning

confidence: 99%