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The impact of financial inclusion on rural food security experience: A perspective from low-and middle-income countries

Author

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  • Renata Baborska
  • Emilio Hernandez
  • Emiliano Magrini
  • Cristian Morales-Opazo

    (Food and Agriculture Organization (FAO) of the United Nations)

Abstract

The paper analyses the impact of using single, combinations and the range of three different formal financial services – savings, credit and payments – on the personal food security experience in rural areas across 88 low-and middle-income countries. It takes advantage of Global Findex database and Food Insecurity Experience Scale (FIES) – both included in the 2014-round of Gallup World Poll that collects data at individual-level and comparable worldwide. Our outcome variable of interest is the individual’s probability of experiencing food insecurity related to difficulties in access to food, measured through FIES. Econometrically, we employ different non-experimental impact evaluation methods: entropy balancing, propensity scores matching and fully interacting linear matching in order to ensure the consistency of our results. We find mixed food security effects depending on the type of service used. Use of savings accounts significantly decreases, use of credit significantly increases and use of formal payment services has no effect on the individual’s probability of experiencing food insecurity. This is consistent with the view that the specific features, rather than the range, of services offered by formal financial sector are the key determinants of their impact on household welfare, thus emphasizing the need to capture more contextual variables in future impact studies to understand not only the size of the impact but how this impact is shaped.

Suggested Citation

  • Renata Baborska & Emilio Hernandez & Emiliano Magrini & Cristian Morales-Opazo, 2020. "The impact of financial inclusion on rural food security experience: A perspective from low-and middle-income countries," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 10(2), pages 1-18.
  • Handle: RePEc:afj:journ3:v:10:y:2020:i:2:p:1-18
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    File URL: https://journals.co.za/doi/10.10520/ejc-rdfin-v10-n2-a1
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    1. Nyanzu, Frederick, 2022. "The joint effects of financial literacy and women’s empowerment training, and financial inclusion on food security: Evidence from Ghana," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322160, Agricultural and Applied Economics Association.

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    More about this item

    Keywords

    Financial inclusion; experience-based food insecurity scale; rural populations; low-and middle-income countries; impact; entropy balancing;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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