What determines Enterprise borrowing from Self-Help Groups? A Predictive Assessment using Supervised Learning Algorithms (with Madhura Dasgupta) [Revise and Resubmit]
Abstract: Despite several advantages of borrowing from Self Help Groups (SHGs), why does enterprise borrowing remain low from this source compared to informal channels and self-nancing, in India (MoSPI, 2020)? To answer this question, we develop a novel village-enterprise matched dataset and apply a wide array of supervised learning methods which predict an enterprise’s choice between SHG vis-a-vis informal credit as the major source of nance. With an AUC of 94%, Xtreme Gradient Boosting (XGBoost) model (Chen and Guestrin, 2016) performs the best. We conduct perturbation and counterfactual analyses to interpret the predictions of our model (Molnar, 2021). Distance from urban areas and socio-demographic factors such as literacy rates and sex ratio in a village are amongst the most important contributors in determining SHG loan pick-up. In contrast, village-level infrastructure such as roads and financial access points like commercial banks play a much smaller role in explaining demand for credit from SHG. We also extend the model to estimate the potential demand for SHG loans
among the universe of firms outside any financial net, that is, the self-financed firms. The potential for SHG inclusion among these firms remains low and skewed toward the southern districts. The paper contributes to the existing literature by highlighting a need for reorientation of financial inclusion strategies.
Public Entry, Heterogenous Consumers and Private Prices: New Evidence from India (with Chirantan Chatterjee) [Under Review]
Abstract: Public sector provision allows redistribution of essential goods and services but may also create adverse impact on private-sector providers. How do private firms respond to the entry of public firms? Answering this question can help design policies to balance redistribution against private sector investment. In this paper, we study the effect on pricing by private-sector pharmacies after the entry of public-private dispensaries (in West Bengal, India) which sell discounted drugs. We find that the eventual response of the private sector depends on the underlying consumer preferences. For drugs with high elasticity consumers, retail and wholesale prices in private firms decline as most consumers shift away, retailers reduce mark-ups which puts downward pressure on wholesale prices as well. Anti-cancer drugs, however, which have lower elasticity, experience an increase in wholesale prices — only high elasticity consumers sort into public options, allowing private pharmacies to compete more aggressively for the low elasticity consumers. We also find that higher concentration of private retailers amplifies the impact, indicating the role of market structure in private sector response. This paper contributes to the literature by showing the effect of consumer heterogeneity in private response to public firm entry.
Value of Managers in the Internal and External Labor Market: Evidence from an Insurance Firm in India (Presented at Society of Labor Economics Conference, Toronto, May 2018)
Abstract: Do good managers improve the productivity of workers within the firm or are they better at spotting talent from the external labor market? In an Indian-insurance firm, I find that a new recruit chosen by a manager with high team productivity outperforms the new recruit chosen by a manager with low team productivity. This variation could stem from a good manager’s skill of recruiting talent or it could be her value addition to agent performance. To find manager value addition (MVA), I use the firm’s internal labor market policy under which agents move across managers. Though, there exists substantial variation in MVA, managers of high productivity teams do not have high value addition. This indicates that when an agent moves to a high productivity team, change in his performance is not attributable to the manager of the high productivity team. Thus, a manager increases team productivity by recruiting more productive
workers from the external labor market. To the best of my knowledge, this is the first paper to complement a manager’s role in selecting good workers from external labor market against her contribution to an individual worker in the internal labor market of the firm.
- Does facetime with the boss matter? Soft Information Communication and Organizational Performance (with Kaushalendra Kishore)
- Credit Access and Gender Gap in Entrepreneurship: Evidence from India (with Sandhya Garg and Sushanta Mallick)