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