Theses Doctoral

Finance and Development

Cramer, Kim Fe

In the first chapter of this dissertation, I ask what role bank presence plays in improving health of households. To explore this question, I use a policy of the Reserve Bank of India from 2005 that incentivizes banks to set up new branches in underbanked districts, defined as having a population-to-branch ratio larger than the national average. In a regression discontinuity design, I compare households in districts just above and just below the national average.

Six years after the policy introduction, households in treatment districts are a third less likely to be affected by an illness in a month. They miss fewer days of work or school due to an illness and have lower medical expenses. Ten years after the policy was introduced, I observe persistently lower morbidity rates, higher vaccination rates, and lower risks associated with pregnancies.

I provide evidence that two previously understudied aspects of banking contribute to the effect: households gain access to health insurance and health care providers gain access to credit. In equilibrium, I observe an increase in healthcare demand and supply. In the second chapter of this dissertation, co-authored with Naz Koont, we provide first empirical evidence that consumer peer effects matter for banks’ deposit demand. Using a novel measure that depicts for each county how exposed peers are to a specific bank in a given year, we tightly identify the causal effect of peer exposure on deposit demand through a fixed effects identification strategy. We address key empirical challenges such as time-invariant homophily.

We find that a one percent increase in a bank’s peer exposure leads to a 0.05 percent increase in deposit market share. This effect has become stronger over time with the rise of the internet and social media, which facilitate cross-county communication. Peer exposure is especially relevant for smaller banks and customers that have access to the internet.

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More About This Work

Academic Units
Thesis Advisors
Giroud, Xavier A.
Ph.D., Columbia University
Published Here
April 13, 2022