Formal vs informal demand for credit by women in urban India : a comparative study in slums of Delhi and Mumbai

Purpose: Over the period, the role of finance has emerged significant in the socio-economic development of the women. There are two major types of finances, i.e. formal and informal ones. Thus, the purpose of this paper is to investigate first the determinants of the demand for credit and then the demand for these credit sources by women especially in urban slums. Design/methodology/approach: In this study, a primary survey was conducted with the help of a structured questionnaire in slums of two major urban cities in India, i.e. Delhi and Mumbai. In total, 450 individuals were interviewed in each city. Findings: This paper presents a range of significant socio-economic factors affecting the demand for credit and source of credit by women borrower in Delhi and Mumbai. Despite, the greater emphasis by the government to increase the formal credit utilization, the informal credit is still preferred. Practical implications: The outcomes of the study are expectedly useful to various policymakers and banks in encouraging women to opt more for the formal credit. The government can follow the research outcomes to scale up the programmes and schemes targeted for women empowerment in urban slums. Originality/value: The study is unique of its kind in doing a comparative analysis in slums of two differently located urban cities with large slum population.