Claessens, StijnFeijen, Erik2012-06-222012-06-222006-12https://hdl.handle.net/10986/8832Using 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.en-USCC BY 3.0 IGOAGGREGATE LEVELAGGREGATE MEASUREAGRICULTURAL EMPLOYMENTAGRICULTURAL OUTPUTAGRICULTURAL PRODUCTIVITYAGRICULTURAL PRODUCTIVITY GROWTHAGRICULTURAL PRODUCTSAGRICULTURAL SECTORAGRICULTURAL WORKERSAGRICULTURAL YIELDSAGRICULTUREARABLE LANDAVERAGE LEVELAVERAGE PRODUCTIVITYBENCHMARKBUSINESS CYCLECALORIES PER PERSONCALORIES PER PERSON PER DAYCENTRAL BANKCONSUMPTION LEVELSCONSUMPTION SMOOTHINGCOUNTRY CHARACTERISTICSCOUNTRY LEVELCROP PRODUCTIONCROP YIELDSCROSS-COUNTRY DIFFERENCESDEPENDENT VARIABLEDESCRIPTIVE STATISTICSDEVELOPED COUNTRIESDEVELOPING COUNTRIESDEVELOPMENT GOALSDEVELOPMENT INDICATORSDROUGHTECONOMETRIC MODELECONOMIC ACTIVITIESECONOMIC DEVELOPMENTECONOMIC GROWTHEMPIRICAL EVIDENCEEMPIRICAL LITERATUREEMPIRICAL RESULTSEMPIRICAL WORKESTIMATION TECHNIQUESEXPORTSEXTREME POVERTYFARMERSFINANCIAL DEVELOPMENTFINANCIAL INTERMEDIARIESFINANCIAL SECTORFINANCIAL SECTORSFINANCIAL SYSTEMSFIXED EFFECTSFOOD CONSUMPTIONFOOD INTAKEFOOD OUTPUTFOOD PRICESFOOD PRODUCTIONGDPGDP DEFLATORGDP PER CAPITAGINI COEFFICIENTGOVERNMENT EXPENDITURESGROWTH INCREASEGROWTH RATEGROWTH RATESHIGH INEQUALITYHOUSEHOLD INCOMEIMPACT ON POVERTYINCOMEINCOME DISTRIBUTIONINCOME GROWTHINCOME LEVELINCOME POVERTYINCOMESINCREASES GROWTHINDEPENDENT VARIABLEINDICATORS OF POVERTYINEQUALITYINEQUALITY COEFFICIENTINEQUALITY REDUCTIONINSURANCELIVESTOCK PRODUCTIONMALNUTRITIONMEATMICRO-FINANCENEGATIVE EFFECTNEGATIVE IMPACTNEGATIVE SIGNPANEL REGRESSIONSPER CAPITA GROWTHPER CAPITA INCOMEPOLICY RESEARCHPOORPOOR COUNTRIESPOOR HOUSEHOLDSPOOR PEOPLEPOVERTY GAPPOVERTY LINEPOVERTY REDUCTIONPOWER PARITYPRIVATE SECTORPRODUCTIVE ASSETSPRODUCTIVITYPRODUCTIVITY GROWTHPROPERTY RIGHTSPUBLIC SECTORPURCHASING POWERREDUCED INEQUALITYREDUCING POVERTYREDUCTION IN POVERTYREGRESSION RESULTSRELATIVE PRICESRICH COUNTRIESRURALRURAL AREASRURAL POPULATIONSAVINGSSHEEPSIGNIFICANCE LEVELSIGNIFICANT EFFECTSIGNIFICANT REDUCTIONSTANDARD DEVIATIONSTATE-OWNED ENTERPRISESTRADE OPENNESSVALUE ADDEDWORLD INEQUALITYWorld Bank10.1596/1813-9450-4080