Background Childhood malnutrition is a major consequence of poverty worldwide. Microcredit programmes—which offer small loans, financial literacy and social support to low-income individuals—are increasingly promoted as a way to improve the health of clients and their families. This study evaluates the hypothesis that longer participation in a microcredit programme is associated with improvements in the health of children of microcredit clients.

Methods Cross-sectional data were collected in February 2007 from 511 clients of a microcredit organisation in Peru and 596 of their children under 5 years of age. The primary predictor variable was length of participation in the microcredit programme. Outcome variables included height, weight, anaemia, household food security and parent-reported indicators of child health. Multivariate linear and logistic regressions assessed the association between the number of loan cycles and child health outcomes. Pathways through which microcredit may have influenced health outcomes were also explored via mediation analyses.

Results Longer participation in microcredit was associated with greater household food security and reduced likelihood of childhood anaemia. No significant associations were observed between microcredit participation and incidence of childhood illnesses or anthropometric indicators. Increased consumption of red meat may mediate the association between the number of loan cycles and food security, but not the association with anaemia.

Conclusions The effects of microcredit on the health of clients’ children are understudied. Exploratory findings from this analysis suggest that microcredit may positively influence child health, and that diet may play a causal role.