Evaluating the Returns to Rural Banking

Evaluating the Returns to Rural Banking

A large-scale examination of the impacts of the expansion of financial services in southern India.

EPoD Harvard Flickr

A large-scale examination of the impacts of the expansion of financial services in southern India.

For the last decade, EPoD researchers have worked with Kshetriya Gramin Financial Services (KGFS) on the first large-scale experimental evaluation of the impact of improved access to formal financial services for rural populations. The team used a randomized controlled trial running from 2009 to 2016 to analyze the impact of services from an innovative rural bank in India that founded its operations on a new set of principles: broad geographical distribution, a low banker-to-client ratio, and a wide variety of products offered, including savings and insurance. The researchers measured impacts on poverty reduction, entrepreneurship, social networks, health, agricultural investments, and female empowerment.

Unusual for its scale, breadth of analysis, and length, the KGFS evaluation took place in three districts in Tamil Nadu, where branches were opened first in 50 areas, and the remaining 50 branches opened 18-24 months later, for a total of 876 villages. The main evaluation included surveys of over 4,000 households, and an additional social network mapping survey was conducted on 19,000 households in 205 villages.  

Analysis of extensive survey data is ongoing, and will seek to answer the question: how does formal financial access improve the lives of rural Indian households as a whole? In addition, the study examines the impact of microfinance access on labor force participation, income, expenditure, savings and borrowing behavior, health outcomes, physiological indicators of stress, health care expenditures and utilization, and expansion and contraction of social networks.

Principal Investigators:
Rohini Pande
Giorgia Barboni, University of Warwick
Erica Field, Duke University

This research is supported by: 
National Science Foundation
National Institute of Health
Templeton Foundation
ExxonMobil via the Women and Public Policy Program (WAPPP) at HKS
International Initiative for Impact Evaluation (3ie)
Agricultural Technology Adoption Initiative (ATAI)
Bill & Melinda Gates Foundation

This project is implemented by Evidence for Policy Design (EPoD) at the Harvard Kennedy School in collaboration with the Institute for Financial Management and Research (IFMR). Our in-country policy partner was Kshetriya Gramin Financial Services (KGFS), Tamil Nadu.