Finance and Hunger: Empirical Evidence of the Agricultural Productivity Channel

48 Pages Posted: 20 Apr 2016

See all articles by Stijn Claessens

Stijn Claessens

Bank for International Settlements (BIS)

Erik Feyen

World Bank - Finance & Markets Global Practice; Ahead Analytics Inc

Date Written: December 1, 2006

Abstract

Using cross-country and panel regressions, the authors show that financial sector development significantly reduces undernourishment (hunger), largely through gaining farmers and others access to productivity-enhancing equipment, translating into beneficial income and general effects. They show specifically that a deeper financial sector leads to higher agricultural productivity, including higher cereal yields, through increased fertilizer and tractor use. Higher productivity in turn leads to lower undernourishment. The results are robust to various specifications and econometric tests and imply that a 1 percentage point increase in private credit to GDP reduces undernourishment by 0.22-2.45 percentage points, or about one-quarter the impact of GDP per capita.

Keywords: Economic Theory & Research, Rural Poverty Reduction, Pro-Poor Growth and Inequality, Inequality

Suggested Citation

Claessens, Stijn and Feyen, Erik H. B., Finance and Hunger: Empirical Evidence of the Agricultural Productivity Channel (December 1, 2006). World Bank Policy Research Working Paper No. 4080. Available at SSRN: https://ssrn.com/abstract=950135

Stijn Claessens (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Erik H. B. Feyen

World Bank - Finance & Markets Global Practice ( email )

1818 H Street, N.W.
Washington, DC 20433
United States
+1 (202) 458 2038 (Phone)
+1 (202) 522 3184 (Fax)

Ahead Analytics Inc ( email )

Washington, DC
United States

HOME PAGE: http://www.aheadanalytics.com

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