Fostering resilience: exploring financial inclusion as a catalyst in mitigating economic policy uncertainty and safeguarding food security in developing countries

Obaid Gulzar, Ameena Arshad and Osama Bin Shahid

Sustainability Accounting, Management and Policy Journal, 2025, vol. 16, issue 6, 1560-1588

Abstract: PurposeThis study aims to investigate the nexus among economic policy uncertainty (EPU) and food security, while also analyzing the mediating effect of financial inclusion in mitigating the adverse impacts of EPU and strengthening food security in developing countries.Design/methodology/approachUsing a quantitative approach, panel data from 2004 to 2021 for 24 countries was evaluated to develop a comprehensive food security index covering four dimensions: food supply, food access, food utilization and food stability, which are further composed of 12 elements. The “Baron and Kenny Three Step Methodology” together with Sobel test was used to investigate the direct and mediating impact of financial inclusion on the association among EPU and food security. To mitigate the issue of endogeneity, instrumental variable technique and two-step generalized methods of moments (GMM) were used. For robustness, the authors use the average mean of EPU as a substitute and use Sustainable Development Goal (SDG) No. 2 (No Hunger) as an alternative measure of food security.FindingsThe findings indicate that EPU adversely affects overall food security, including its dimensions such as food supply, food access, food utilization and food stability. This study further demonstrates that financial inclusion plays a significant mediating role in the association among EPU and food security. The results highlight that financial inclusion emerged as a notable factor in mitigating the negative effects of EPU on food security.Practical implicationsGovernments and policymakers should prioritize and implement programs aimed at improving financial inclusion, which will help individuals and nations to adopt required tools they need to build resilience against EPU, and ultimately safeguarding their food security. This eventually leads toward attainment of not only SDG 2 (No Hunger) but also assists in achieving SDG 1 (No Poverty) and SDG 10 (Inequality Reduction). These comprehensive efforts will also lead to the establishment of sustainable future for all.Originality/valueThere is limited body of research that explores the interplay of these three variables within a single study. Likewise, the role of financial inclusion as a mediator in the association among EPU and food security represents a novel contribution. The study uses a multi-indicator approach to comprehensively measure key variables such as food security and financial inclusion.

Keywords: Sustainable Development Goals (SDGs); Food security; Hunger; Economic policy uncertainty (EPU); Financial inclusion; Mediation analysis (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:sampjp:sampj-08-2023-0591

DOI: 10.1108/SAMPJ-08-2023-0591

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