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Access to Financial Services and Its Impact on Household Income: Evidence from Rural Ghana

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Abstract

This study examines the determinants of access to financial services and its impact on household income, using household data collected from rural Ghana. An endogenous treatment regression model is utilized to address the selection bias issue. The results reveal that access to financial services is affected by household heads’ age, gender, education, off-farm work participation, farming experience, and access to non-fixed assets. Access to financial services exerts a positive and statistically significant impact on household income. Moreover, we find that access to financial services has a larger income impact for households with no member with chronic disease and male-headed households, relative to their counterparts. Our findings highlight the importance of financial services patronization in improving rural household welfare.

Résumé

Cette étude examine les déterminants de l'accès aux services financiers et son impact sur le revenu des ménages, en utilisant des données sur les ménages, collectées dans les zones rurales du Ghana. Un modèle de régression de traitement endogène est utilisé pour résoudre le problème du biais de sélection. Les résultats révèlent que l'accès aux services financiers est affecté par l'âge du ou de la chef·fe de famille, son sexe, son niveau de scolarité, sa participation au travail non agricole, son expérience agricole et son accès aux actifs non fixes. L'accès aux services financiers a un impact sur le revenu des ménages à la fois positif et statistiquement significatif. De plus, nous constatons que l'accès aux services financiers a un impact plus important sur le revenu des ménages dans lesquels aucun membre n’est atteint de maladie chronique et des ménages dirigés par un homme, par rapport à leurs homologues. Nos résultats soulignent l'importance de sponsoriser des services financiers pour l'amélioration du bien-être des ménages ruraux.

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Funding

This work was supported by Sichuan Agriculture University and Soft-Science Program of Sichuan Department of Sci-Technology under the Study of Theory, Mechanism and Policy for the Coupling of Modern Agric-Technology Innovation and Financial Innovation (18RKX0773).

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Authors and Affiliations

  1. College of Economics, Sichuan Agricultural University, Chengdu, China

    Martinson Ankrah Twumasi, Anthony Siaw & Yuansheng Jiang

  2. College of Economics and Management, Huazhong Agricultural University, Wuhan, 430070, China

    Hongyun Zheng

  3. College of Management, Sichuan Agricultural University, Chengdu, China

    Love Offeibea Asiedu-Ayeh

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  1. Martinson Ankrah Twumasi
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Contributions

MAT: writing, original draft preparation; investigation; writing, review and editing; conceptualization; methodology; software; and formal analysis. HZ: supervision, writing—review and editing; LOA-A: writing, review, and editing; AS: writing, review, and editing; YJ: supervision, funding.

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Appendix

Appendix

See Tables 5 and 6 and Fig. 4.

Table 5 Pearson correlation analysis of the selected IVs
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Table 6 Sargan test of the selected IVs
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Fig. 4
figure 4

The heatmap for the matrix of Pearson’s correlation coefficients

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Ankrah Twumasi, M., Zheng, H., Asiedu-Ayeh, L.O. et al. Access to Financial Services and Its Impact on Household Income: Evidence from Rural Ghana. Eur J Dev Res 35, 869–890 (2023). https://doi.org/10.1057/s41287-022-00544-y

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