Infrastructure and Finance : Evidence from India's GQ Highway Network
This paper uses the construction of India's Golden Quadrangle central highway network, together with comprehensive loan data from the Reserve Bank of India, to investigate the interaction between infrastructure development and financial sector...
| Main Authors: | , , , , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/729281560437538266/Infrastructure-and-Finance-Evidence-from-Indias-GQ-Highway-Network http://hdl.handle.net/10986/31875 |
| Summary: | This paper uses the construction of
India's Golden Quadrangle central highway network,
together with comprehensive loan data from the Reserve Bank
of India, to investigate the interaction between
infrastructure development and financial sector depth. The
paper identifies a disproportionate increase in loan count
and average loan size in districts along the Golden
Quadrangle highway network, using stringent specifications
with industry and district fixed effects. The results hold
in straight-line instrumental variable frameworks and are
not present in placebo tests with another highway that was
planned to be upgraded at the same time as Golden Quadrangle
but subsequently delayed. Importantly, however, the results
are concentrated in districts with stronger initial
financial development, suggesting that although financing
responds to large infrastructure investments and helps spur
real economic outcomes, initial financial sector development
might play an important role in determining where real
activity will grow. |
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