Financial inclusion and food insecurity: Examining linkages and potential pathways

Considering the worsening levels of food insecurity globally, studies exploring the link between financial inclusion and food insecurity have become imperative. This paper contributes to the literature by examining the effect of financial inclusion on food insecurity using a multidimensional index of financial inclusion and a food insecurity construct obtained from the Food Insecurity Experience Scale. Based on data extracted from the seventh round of the Ghana Living Standards Survey, our preferred endogeneity-corrected results indicate that improvements in financial inclusion is associated with a reduction in food insecurity. This finding is consistent across different conceptualisations of food insecurity, alternative weighting schemes and cut-offs for the financial inclusion index and different quasi-experimental methods. Financial inclusion is mainly effective in reducing food insecurity in male-headed and rural-located households. Our findings reveal that entrepreneurship is an important pathway through which financial inclusion influences food insecurity.

Automated summary

Considering the importance of the link between financial inclusion and food insecurity, this study examines the impact of financial inclusion on food insecurity using a multidimensional index and the Food Insecurity Experience Scale. The results show that improving financial inclusion is associated with a reduction in food insecurity, which is consistent across different measures and methods. Financial inclusion is particularly effective in reducing food insecurity in male-headed and rural households, with entrepreneurship identified as an important pathway.