Effects of Religious Violence on the Indian Credit Sector

Does violence have any financial effects? In order
to answer this question, it is useful to consider if
violence has an economic shock. Just like any
typical adverse shock, violence can have an economic
impact if it induces uncertainty in a region and
consequently decreases investment opportunities in
the affected area. The act of violence explored in
this study is the 1998 bombing that occurred in
Coimbatore, India, as a result of religious tension
between the Hindu and Muslim communities. The
vehicle of analysis is a bidding Rosca (chit fund),
and the outcomes explored are arrear rates and
winning bids. More specifically, this paper aims to
determine whether individuals in Roscas affected by
the bomb blasts have higher arrear rates and more
volatile winning bids compared to participants in
the unaffected Roscas.

Autorentext
Prassanna Raman graduated cum laude from Williams College in Williamstown, MA, with a degree in Economics and Art History.

Klappentext
Does violence have any financial effects? In order to answer this question, it is useful to consider if violence has an economic shock. Just like any typical adverse shock, violence can have an economic impact if it induces uncertainty in a region and consequently decreases investment opportunities in the affected area. The act of violence explored in this study is the 1998 bombing that occurred in Coimbatore, India, as a result of religious tension between the Hindu and Muslim communities. The vehicle of analysis is a bidding Rosca (chit fund), and the outcomes explored are arrear rates and winning bids. More specifically, this paper aims to determine whether individuals in Roscas affected by the bomb blasts have higher arrear rates and more volatile winning bids compared to participants in the unaffected Roscas.