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 bank access. 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. We employ a difference-in-discontinuity estimation strategy, wherein we compare districts with greater bank accessibility to those with lower bank access around the cutoff defined by the bank branch expansion policy. Our findings reveal that among districts located around the policy cutoff, those with higher levels of bank accessibility experienced lower infant mortality during the post-demonetization period compared to districts with comparatively lower access to banks.