The Impact of Micro-Banking on Health: Evidence from Self-Help Group Involvement and Child Nutrition

Low income is only one financial problem that poor families in developing countries face; impoverished households must also face irregularity of their low incomes. Self-help groups (SHGs) can enhance consumption stability by relaxing savings and credit constraints. In this study, I investigate the extent to which SHGs improve a particular dimension of household wellbeing: child nutrition. I analyze households affiliated with the SHGs started by the People’s Education and Development Organization (P.E.D.O.) in rural Rajasthan, India. Children who had greater levels of exposure to household SHG membership at a young age have healthier anthropometric statuses than their siblings who had relatively less. This relationship does not appear to be driven by events coinciding with SHG involvement or by the tendency for certain children, who were also exposed to SHGs, to receive better nutrition than their siblings. These findings suggest that SHGs could improve child nutrition but must be interpreted in light of limitations of and potential biases in the data.