comments, and Jonathan Morduch (NYU) for suggestions.

Abstract: We show that financial sector development significantly reduces undernourishment (hunger). We find evidence of specific financial sector development channels, including increased access to productivity enhancing equipment⎯fertilizer and tractor use⎯translating into higher agricultural productivity and cereal yields, with accompanying beneficial income and general quantity and price effects. Results are robust to various specifications and econometric tests, including both cross-country and panel regressions, and using various control variables. They are economically large and imply that a 1 percent increase in private credit to GDP reduces undernourishment by 0.22-2.45 percent, or about one-quarter of the impact of GDP per capita on undernourishment