Towards sustainable agricultural development and food security in East Asia: The role of broad money and banking credits

Abstract

The existing literature has extensively explored the role of financial development in boosting agricultural output. However, there is a lack of empirical research on the effects of broad money and banking credits on food production in East Asian countries. This study addresses this gap by examining the relationship between financial variables and agriculture in selected East Asian economies from 1995 to 2019, focusing on food security. Our findings indicate that increases in broad money and financial sector credit significantly enhance long-term food security by 0.216% and 0.846%, respectively. Additionally, we observed positive correlations between food security and agricultural inputs: a 1% increase in agricultural land, fertilizer use, and renewable energy adoption improves food security by 0.219%, 0.049%, and 0.146%, respectively. Robustness checks and Granger causality tests further validate these results. This study underscores the critical role of financial resources and agricultural inputs in food security and calls for a reassessment of credit systems to mitigate any adverse effects. These findings provide important insights for policymakers aiming to strengthen food security in East Asia.