A Study of India with Select Countries on Socio Economic Factors and Formal Credit

The economic development of a country is positively associated with economic well being of its people. The banking sector of all the nations is endeavoring to relax lending norms so that people resort to formal credit instead of informal credit. Further, efforts are being made to ensure that banking system is able to meet the financial needs of different sections of the society by providing timely and affordable credit. The present study is an attempt to explore whether all the socio economic groups of the society (female, male, income poorest, income richest, young adults, older adults, population with primary education or less, population with secondary education or more, rural population, in labour force and out of labour force population) resort to formal credit in the same way. Further, the study makes a comparative study to extract whether Indian banking sector performance in terms of formal credit on the basis of socio economic factors is at par with selected countries or not. The study uses independent T test to make pair wise comparison and ANOVA test to compare performance of Indian banking sector with selected countries. The study reveals that being male, rich, older adult, possessing secondary education or being in labor force significantly impact borrowings from a financial institution or using a credit card. The study also highlights that the countries in comparison to which India is reporting lower average proportion for formal credit on the basis of socio economic factors are either upper middle income countries or high income countries.