# **B Integrity of the Assignment Variable**

The identification strategy relies on the assumption that there was no manipulation of the assignment variable (land pledged as collateral at the time of loan origination), which would make selection to either side of the discontinuity non-random. This appendix presents several tests verifying the integrity of the assignement variable. As a first test, Figure B.1, Panel (a) plots the density of the forcing variable according to bank records for all surveyed households within a band of _±_ 1 hectares of the program eligibility threshold in bins of 0.1 hectares. The plots indicate that both for the entire sample frame and the sample of surveyed households, there is notable bunching at the cutoff but also, to a lesser extent, around 1.5 and 2.5 hectares. When the distribution is plotted separately for commercial and cooperative banks in Figure B.1, Panel (b), we see that this pattern is almost entirely due to the subsample of cooperative bank accounts. McCrary’s (2008) test for discontinuity in the forcing variable correspondingly fails to reject the presence of a discontinuity with p _<_ 0.01. It is worth noting that the McCrary test also fails to reject discontinuities at 4 and 6 acres, suggesting that bunching at whole numbers is likely to be an important part of the explanation.

In order to gauge the extent of potential manipulation, and to provide for the possibility of a robustness check using a manipulation-free sub-sample, we audited the official land records of surveyed households, taking advantage of the state of Gujarat’s electronic repository of land records. In the state of Gujarat, all official landholdings are recorded in the centralized electronic _e-Dhara_ system. Manipulation of _e-Dhara_ records is considered highly unlikely for several reasons: electronic land records are centrally administered by an authority separate from the institutions keeping land records at the village level. There are several additional checks against manipulation and any changes in landholding status have to be cleared and verified by independent authorities.

## **B.1 Evidence from the Audit of Electronic Land Records**

To compare the landholding numbers reported by banks and survey respondents, we obtained official copies of the land records of 2,064 of 2,897 survey respondents or 71% of the sample. Table B.1 reports the land audit results. There are several legitimate reasons for electronic landholding records to differ from the landholding numbers reported by the banks. First, many banks accepted partial mortgages: to qualify for some loans, farmers were allowed to mortgage only a portion of their land. In these cases, the bank-reported landholding is less than the total land held by the farmers, and the smaller landholding amount will have been used to determine program qualification. This does not constitute manipulation, and does not affect the validity of the identification strategy.

Second, in a smaller number of cases loans considered the landholdings of multiple individuals. Most frequently, land held by multiple members of the same extended household is pooled in order to qualify for a larger loan. In many cases, the loan was recorded as having a single beneficiary, and the total landholding was listed –even though the beneficiary did not himself or herself own all of the listed 50