How Access to Credit Affects Self-Employment: Differences by Gender during India’s Rural Banking Reform

This study uses a pooled sample of household survey data collected by India’s National Sample Survey Organization between 1983 and 2000 to examine the impact of access to credit on self-employment among men and women in rural labor households. Results indicate that access to credit encourages women’s self-employment as own-account workers and employers, while it discourages men’s self-employment as unpaid family workers. Additional results indicate that ownership of land, a key form of collateral, serves as one of the strongest predictors of men’s and women’s self-employment. There are also interesting class differences within the bottom tier of India’s caste system: self-employment is less likely for members of scheduled castes, but more likely for members of scheduled tribes.