Impact of banking penetration on stock market participation: A district-level analysis

This paper examines the impact of increasing bank branches in a district on the stock market participation of households. Using household-level data from the 70 th and 77 th rounds of the National Sample Surveys, we find that households’ decision to participate in the stock market increases significantly when the number of bank branches in their district increases. The subsample analysis shows that an increase in bank branches has a greater impact in rural areas than urban areas. Also, OBC families and household heads with graduate-level or higher education are the primary beneficiaries of increased banking services on stock market participation.