The Effect of National Radio on Financial Behavior

By Smeet Butala, University of Maryland

This paper examines the effects of increasing national coverage of All India Radio on financial inclusion during the early 2000s. Specifically, the dependent variable is bank account ownership and the explanatory variable of interest is subdistrict-level radio coverage. India’s linguistic diversity means that radio coverage captures the proportion of the population that can effectively listen to accessible radio broadcasts. I include the standard controls of literacy, wealth, access to banking, and other demographic variables. The relationship between radio coverage and bank account ownership is regressed using a subdistrict-level fixed-effects model in order to counteract various endogeneity concerns. Changes in radio coverage are statistically and economically significant, and demonstrate modest changes in financial inclusion in response. Results vary between rural and urban regions, with rural regions experiencing greater effects from radio coverage than urban regions. Several robustness checks confirm the results provided. Policy implications are two-fold: increasing radio coverage in terms of language and geography across India and increasing access to radio broadcasts are expected to increase financial inclusion.

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