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The Effect of Financial Inclusion on Food Security: Evidence from Developing and Developed Countries

Author

Listed:
  • Yasmin
  • Sekar Utami Setiastuti

    (Faculty of Economics and Business, Universitas Gadjah Mada, Yogyakarta, Indonesia)

Abstract

This study investigates the global impact of financial inclusion on food security, with a focus on both developing and developed countries. The study constructs a financial inclusion index using the Sarma method and secondary data sourced from IMF and World Bank databases. System GMM is employed as the estimation method due to its effectiveness in addressing endogeneity issues and its efficient and consistent use of instruments. The analysis reveals that financial inclusion has a positive and statistically significant effect on food security across all research sub-samples. In addition, the study incorporates interaction variables between financial inclusion and the COVID-19 pandemic to explore how the crisis alters the relationship between financial inclusion and food security. The findings indicate that the COVID-19 crisis has globally diminished food security and moderates the impact of financial inclusion on food security. Overall, the study confirms that financial inclusion is a crucial factor in enhancing food security worldwide, with no substantial disparity between developed and developing countries. Nevertheless, the global COVID-19 pandemic has demonstrated a capacity to weaken the beneficial effects of financial inclusion on food security.

Suggested Citation

  • Yasmin & Sekar Utami Setiastuti, 2023. "The Effect of Financial Inclusion on Food Security: Evidence from Developing and Developed Countries," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 69, pages 128-145, December.
    • Handle: RePEc:lpe:efijnl:202309
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    References listed on IDEAS

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    1. 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.
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    More about this item

    Keywords

    financial inclusion; food security; COVID-19; System-GMM;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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