Abstract
Climate shocks impose detrimental impacts on food security and disrupt access to nutritional diversity, particularly in developing economy settings. Although village banks serve as informal financial safety nets that help support vulnerable households in regard to food security, their broader cushioning effects during periods of climate-induced stress remain unclear. This paper employs mediation analysis to investigate how these savings and credit groups, while playing a buffering role, may inadvertently shape households’ dietary diversity in response to flood shocks. The study finds that the direct effect is that flood shock reduces dietary diversity and food security by 24 percentage points. It also finds that village banks cushion this reduction by 1.22 percentage points. The total effect is a modest reduced impact to a 22.8 percentage point reduction in dietary diversity. These results illustrate that village banks modestly mitigate the adverse effects of floods on dietary diversity. This mediation effect highlights the supportive role of village banking in cushioning against climate shocks, while also emphasizing the potential for strengthening its capacity to address vulnerabilities in communities. The study concludes that to enhance resilience and sustain food security, policy interventions should aim to strengthen village banking mechanisms while integrating disaster preparedness strategies into financial inclusion programs in climate shock-prone areas.
Details
Presentation Type
Paper Presentation in a Themed Session
Theme
Technical, Political, and Social Responses
KEYWORDS
Climate shocks, Village banking, Dietary diversity, Food security, Resilience mechanisms
