Experience of communal conflicts and intergroup lending

Raymond Fisman, Arkodipta Sarkar, Janis Skrastins, Vikrant Vig

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

We provide microeconomic evidence on ethnic frictions and market efficiency, using dyadic data on managers and borrowers from a large Indian bank. We conjecture that, if exposure to religion-based communal violence intensifies intergroup animosity, riot exposure will lead to lending decisions that are more sensitive to a borrower’s religion. We find that riot-exposed Hindu branch managers lend relatively less to Muslim borrowers and that these loans are less likely to default, consistent with riot exposure exacerbating taste-based discrimination. This bias is persistent across a bank officer’s tenure, suggesting that the economic costs of ethnic conflict are long-lasting, potentially spanning across generations.

Original languageEnglish (US)
Pages (from-to)3346-3375
Number of pages30
JournalJournal of Political Economy
Volume128
Issue number9
DOIs
StatePublished - Sep 1 2020
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics

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