Authors Rajiv Dehejia and Nandini Gupta discovered that despite theory suggesting that capital markets affect entrepreneurship and financial market development is associated with an increase in self-employment, there seems to be an opposite effect in India. More expansion in bank branches and credit from government-owned banks is observed when there is a rise in employment in formal sector firms. They also found that there is greater access to credit from formal institutions when there is a decrease in household employment or an increase in formal employment and wages. In an age of micro-financing micro to small enterprises, it has been observed that access to finance through traditional channels also has a positive impact on these firms, as they borrow more in areas where there is access to government banks.
Title: Financial Development and Occupational Choice: Evidence from India
Source: Social Science Research Network