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What determines the household decision to borrow for investment or repayment of old debt? The Indian story

What determines the household decision to borrow for investment or repayment of old debt? The... Borrowing for investment in either physical or human capital promotes growth while that for consumption or debt repayment may lead to so called 'debt-trap' for the households. The present paper probes deeper into the decision-making process of the households regarding choice between these alternative borrowing. The data comes from All India Debt and Investment Survey (NSS 70th round). These methods used are Cragg's Box-Cox double hurdle model and instrumental variable (IV) probit model. Our study shows the decision to borrow for investment purposes depends on such factors as gender, religion, location, education, asset position as well as on the status of financial inclusion of households. The decision to borrow for repayment of existing debt is most prevalent among urban educated households in addition to land-owning rural borrowers. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Information and Decision Sciences Inderscience Publishers

What determines the household decision to borrow for investment or repayment of old debt? The Indian story

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Publisher
Inderscience Publishers
Copyright
Copyright © Inderscience Enterprises Ltd
ISSN
1756-7017
eISSN
1756-7025
DOI
10.1504/ijids.2022.122720
Publisher site
See Article on Publisher Site

Abstract

Borrowing for investment in either physical or human capital promotes growth while that for consumption or debt repayment may lead to so called 'debt-trap' for the households. The present paper probes deeper into the decision-making process of the households regarding choice between these alternative borrowing. The data comes from All India Debt and Investment Survey (NSS 70th round). These methods used are Cragg's Box-Cox double hurdle model and instrumental variable (IV) probit model. Our study shows the decision to borrow for investment purposes depends on such factors as gender, religion, location, education, asset position as well as on the status of financial inclusion of households. The decision to borrow for repayment of existing debt is most prevalent among urban educated households in addition to land-owning rural borrowers.

Journal

International Journal of Information and Decision SciencesInderscience Publishers

Published: Jan 1, 2022

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