The Effect of Financial development on Food Security of Rural Households in Iran

In order to achieve food security, it is necessary to supply enough food in a large scale and to give everybody the access to the food through fair distribution. In fact, it is the main foundation of a developed society and is considered as a key factor to reach mental and physical health for society members. Financial development means expansion of financial sector of the economy including: markets, institutions and financial instruments. In this study, the effect of financial development on food security of rural households during the period 1986- 2010 (1389-1365) was investigated. First the level of food security for rural household was measured using the aggregate household food security index (AHFSI). Then, the level of financial development in the country was determined by using financial development index (FD). The effect of financial development on food security of rural households was investigated using auto regressive distributed lags method (ARDL). Results indicated a positive and significant effect of financial development on food security of rural households, both in short and long run. Therefore, sound financial development policies based on specific and definite indicators could increase food security in rural areas.