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Unformatted text preview: Burgess & Pande (2003) Credit and Microﬁnance 3 Initial financial development X year 0
1969 1973 1977 1981 1985 1989 1993 1997 -3 -6 -9 -12 year
ruralcredit share FIGURE: INITIAL FINANCIAL DEVELOPMENT AND RURAL CREDIT SHARE
Notes: The series `rural credit share’ graphs the set yearwise coefficients on initial financial development (measured as number of bank branches in 1961) from a regression of the form
described in equation (2). The dependent variable is share of total bank credit disbursed by rural bank branches. BR = αi = βt + γ1 (Bi1961 × [t − 1961]) + γ2 (Bi1961 × [t − 1977])
+ γ3 (Bi1961 × [t − 1990]) + γ4 (Bi1961 × P1977 ) + γ5 (Bi1961 × P1990 ) + εit
[t − 1961], [t − 1977] and [t − 1990] denote linear time trends starting in 1961,
1977 and 1990 respectively – these enter the regression interacted with our
measure of a state’s initial ﬁnancial development, Bi1961
The main coefﬁcients of interest γ1 , γ2 and γ3 measure the average 19611977 trend relationship between a state’s initial ﬁnancial development and
rural branch expansion and the subsequent changes in this trend relationship (be- tween 1978 and 1990, and between 1991 and 2000)
Rural Banks and Economic Development: IV Estimates
OLS: makes little sense in this context as design of program means that
more backward areas receive more bank branches
2SLS: assume that state speci.c trend in yit is potentially correlated with
initial ﬁnancial development but there is no change in trend in the absence
Development Economics, LSE Summer School 2007 126 ...
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This note was uploaded on 12/29/2011 for the course ECO 307 taught by Professor Dublin during the Spring '10 term at SUNY Stony Brook.
- Spring '10