Banks Protecting Children: Agricultural Income Shocks, Child Health, and Financial Development in Rural India

Dimitrios Argyros

No 202602, Working Papers from School of Economics, University College Dublin

Abstract: This study examines the role of financial infrastructure in shaping child health outcomes in rural India, with a particular focus on whether access to rural banking mitigates the adverse effects of agricultural income shocks. Using data from the National Family and Health Surveys (NFHS), I combine child-level health outcomes with exogenous variation in local agricultural income driven by the interaction of global crop price fluctuations and location-specific agricultural conditions, alongside measures of local financial development. The results show that proximity to rural banks substantially attenuates the negative effects of income shocks on child health. These findings challenge the conventional view that rural areas with limited engagement in the formal financial sector benefit littlefrom financial development. Instead, the evidence highlights the indirect yet economically meaningful role of expanded financial access in protecting children’s health during periods of economic volatility.

Keywords: Child health; Financial development; Rural banks; Agricultural income shocks; India (search for similar items in EconPapers)
JEL-codes: G21 I15 O16 Q12 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2026-02
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