The study aims to test the interacting role and threshold of quality of governance in the financial development and food security contagion.
The Two-Step System Generalized Methods of Movement (SGMM) was adopted for the econometrics estimation. Time series panel data on 26 sub-Saharan African (SSA) countries were employed from 2000 to 2020.
The findings revealed that the conditional effect of financial development on food security in the studied countries is positive. Therefore, quality of governance acts as a moderator on the association between financial sector development and food security above a threshold. Thus, the study’s principal practical implication is that institutional quality reverses financial development negative unconditional effect on food security, and quality of governance could be enhanced beyond a particular policy defined threshold to attain the needed goal of increasing food security. However, quality of governance at the beginning level would not drive the desired increment in food security until it rises above the threshold of 0.13.
The key contributions of the study are that the paper ascertained the threshold beyond which quality of governance assists financial development to induce food security in Africa. In addition, the study showed that quality of governance is a catalyst to promote financial development in promoting food security in the sampled countries.
