Assessing the role of financial inclusion in reducing urban food insecurity in Hawassa City, Ethiopia

This study examined the role of financial inclusion in reducing urban food insecurity. We estimated an index of financial inclusion using different indicators to capture its multidimensionality. We also used the Food Insecurity Experience Scale to measure food insecurity level. We then applied the Principal Component Analysis to estimate the food insecurity index. Next, we applied the Multiple Regression Model to see the relationship between financial inclusion and food insecurity. Findings indicate that higher financial inclusion, which is measured through account ownership, access to financial branches, mobile banking, access to ATM, agent banking, and savings, was significantly and negatively related to food insecurity by enhancing financial stability and food access. Conversely, borrowing was associated with increased food insecurity, while insurance showed no significant effect. Key socioeconomic variables such as employment status, education level, income, and remittance receipt also contributed to reducing food insecurity, while variables such as age, marital status, and household size showed no significant effect. Notably, male-headed households were found to be more food insecure than female-headed ones, potentially due to differential access to social support systems. This study offers practical insights for policymakers to design inclusive financial systems that enhance household resilience. By demonstrating how financial inclusion reduces vulnerability, the findings support targeted interventions aligned with SDG 17, i.e., developing financial resources for the success of the SDGs. Our result underscores the need for improved financial accessibility, especially among the most vulnerable, to support both food security and sustainable urban development in Ethiopia and similar contexts. JEL: O12