Determinants of banking outreach: An empirical assessment of Indian states

The paper explores the factors influencing banking outreach. Using time series data on Indian states for 1973-2004, the analysis indicates a divergence across states in terms of the outreach of formal finance over time, ceteris paribus. The findings also uncover an important role of literacy and physical infrastructure. As well, the findings also point to the fact that the spread and use of banking services can be adversely affected by unfavorable labor regulations. Robustness tests reinforce these findings.