Centre for Development Economics
Department of Economics
Delhi School of Economics
ANNOUNCE A SEMINAR
Demonetization and Child Health: Evidence from India
by
Shampa Bhattacharjee
(Shiv Nadar University)
(Thursday, September 25, 2025, at 3:10 PM, IST )
Venue: Amex Room
Abstract:-
This paper analyzes the impact of the 2016 Indian demonetization episode on infant mortality. The demonetization policy rendered approximately 86% of the circulating Indian currency invalid as legal tender, resulting in substantial shortages of cash in the following months. Old notes could be exchanged for new ones from banks. Thus, the effects of demonetization are expected to be more pronounced for districts with lower access to banks. In order to identify the health effects of demonetization, we use a previous bank branch expansion policy that resulted in a discontinuity in access to banks at a predetermined policy cutoff. Using a difference-in-discontinuities design, we compare infant mortality before and after demonetization across districts with differing levels of bank access near the policy threshold. Our findings indicate that rural households residing in districts with greater access to banks near the threshold experienced significantly lower infant mortality. We also find evidence of a higher probability of institutional births in districts with greater banking access in the post-demonetization period. We show that this is likely driven by the liquidity shock, rather than by the potential negative income shock resulting from demonetization.