Does bank expansion reduce domestic violence? Causal evidence from India

Abstract

Multiple studies have shown that dowry payments are among the main causes of domestic violence in developing countries. This paper studies the effects of banking expansion on dowry payments and domestic violence in India. Using a fuzzy regression discontinuity design, we present robust evidence that financial inclusion brought about by banking expansion reduces dowry-related deaths and cruelty by husbands. We propose two primary mechanisms underlying this relationship. First, banking expansion enhances the ability of the bride's family to make higher cash payments and more wedding gifts to the groom's family at the time of marriage, often known as dowry. Second, banking expansion empowered women as reflected by better education outcomes for girls. Additionally, by enhancing the household's ability to make dowry payments and improving girls’ education outcomes, banking expansion led to better spouse quality as measured by their education and earnings, reducing the likelihood of domestic violence.