Self-Employment in Household Enterprises and Access to Credit: Gender Differences during India’s Rural Banking Reform

Abstract

This study uses use four cross sections of household survey data collected by India’s National Sample Survey Organization between 1983 and 2000 to examine the role of credit in encouraging small-scale entrepreneurship among men and women in rural labor households. Results from two-stage probit least squares estimations indicate that land ownership, a key means of providing collateral, serves one of the strongest predictors of men’s and women’s self-employment. However, women’s self-employment exhibits a substantially stronger and more positive response to having a loan compared to men. Results also point to interesting class differences within the lowest tier of India’s social class system: self-employment is less likely for members of scheduled castes (who may be pressured by upper castes to remain employed by others), but higher for members of scheduled tribes (who tend to rely on their own skills to make a living).