Are Banks Bad for Boys? Estimating the Effect of Banks on Child Mortality, Education, and Fertility in Rural India

I investigate whether a large-scale bank expansion program affected parents' decisions to invest in the health and education of their children. From 1977 to 1990, the Indian government implemented a new licensing program to encourage the construction of banks in underserved rural communities. The timing of the bank expansion program is used as an instrument to account for the possible reverse causality of child mortality or education rates affecting bank expansion. An empirical analysis using large-scale Indian surveys finds that states with a more rapid expansion of rural banks did not have significantly lower child mortality overall. However, in households with a first-born daughter, in which discrimination against daughters and in favor of sons is exacerbated, excess female mortality declines with an increase in banks. This occurs through higher male mortality rather than lower female mortality. Similarly, an increase in banks has no effect on daughters' education, but it reduces sons' years of education. Both of these effects occur in a context of more banks causing lower fertility and a reduction in poverty rates, which if anything should lead to reduced child mortality and higher education levels.