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PurposeThis study investigates the effect of government domestic payment arrears on private investment. The authors argue that an increase in government domestic arrears can reduce private sector investment owing to the competition for credit.Design/methodology/approachThe prediction is empirically tested using data for 33 Sub-Saharan Africa (SSA) countries for the period 2007–2018 using a panel general methods of moment estimation technique. This is also complemented with impulse responses derived from the standard vector autoregressive model.FindingsThe results show that an increase in government domestic arrears adversely affects private investment in SSA and most subregional communities within SSA. It also revealed that private investment negatively responds to shocks in government domestic arrears.Originality/valueThis is the first study that attempts to investigate the effect of government domestic borrowing arrears on private investment. It seeks to serve as a guide to governments in their domestic borrowing decisions to ensure timely servicing.

The purpose of this study is to examine the effects of disability on access to financial services in Ghana. Data for the study is obtained from the seventh wave of the Ghana Living Standards Survey (GLSS 7). We use instrumental variable (IV) regression approach to examine the effect of disability on the use of formal financial institutions and mobile money. We find that being disabled reduces the likelihood of having access and using any of the financial institutions or having at least a product/service with a bank. Further, our results show that while people with disability are less likely to use commercial bank (6.3%), rural bank (4.8%) and at least one financial service (6.3%), they are 53.7% more likely to use mobile money. Collaborative actions are needed to raise awareness on both mobile money and other Fintech solutions, and accessibility functions that can support the inclusion of persons with disabilities into the financial system. JEL Codes: G21, I12, J71

This paper assesses disruptions in the non-bank financial institution (NBFI) sector and the protracted effects of COVID-19 and the lockdown on the NBFI sector. The paper focuses on microfinance institutions in Ghana using rapid response survey data obtained from the Ghana Microfinance Institutions Network between January 2020 and April 2020. Poor corporate governance, improper documentation of transactions, and impaired loan portfolio among others were antecedents to the disruptions. Regarding the lockdown effects, we found that savings value contracted and the possibility of a further deteriorating portfolio is anticipated thus reducing interest income. The use of digital channels of delivering savings and loan products increased while the physical delivery channel decreased. The regulator needs to have a second look at microfinance regulation in Ghana. Policy should focus on expanding and upscaling the use of digital and remote banking means in reaching out to clients.

This study examined the relative and joint effects of credit, savings, remittances and micro-insurance on household poverty. Data on 30,527 households obtained from the Ghana Living Standards Surve...

The paper examines the effect of regulation on microfinance institutions’ (MFIs) sustainability and outreach in Sub‐Saharan Africa (SSA). Using unbalanced panel data from 2002 to 2012 for 30 countr...

PurposeDoes financial inclusion matter for productivity among smallholder farmers? The authors answer this question by using the sixth and seventh rounds of the Ghana Living Standard Survey to examine the extent to which financial inclusion affects productivity among smallholder farmers in Ghana.Design/methodology/approachThe study uses a pooled data of the 6th and 7th rounds of the Ghana Living Standard Survey which are national representative data. The authors model an Instrumental Variable (IV) to correct for endogeneity in financial inclusion and a dominance analysis to examine the effects of access to credit, ownership of savings account and insurance product on farmers' productivity.FindingsResults from the study indicate that financial inclusion significantly enhances productivity. Moreover, credit, savings and insurance products influence productivity at various degrees. Thus, expanding the scope of financial services (access to credit, savings and insurance) among smallholder farmers is crucial for inclusive finance and sustainable agricultural production.Practical implicationsThe findings of the study have implications for financial institutions in the design of financial products that the meet the needs of smallholder farmers.Originality/valueSeveral studies have looked at how access to credit influences agricultural productivity in Africa. However, in recent times financial inclusion has been advocated for because it goes beyond mere access to credit. This paper to the best of our knowledge is the first of its kind to examine how financial inclusion could affect agricultural productivity in Ghana.

We explore crop yield volatility among rural and urban smallholder farmers using data from the sixth round of the Ghana Living Standard Survey (GLSS 6). Three separate ordinary least squares (OLS) models are estimated to determine the effect of access to credit, rural farming, and the use of technological inputs on crop yield. Our findings suggest that while rural farmers benefit from access to credit, urban farmers better utilize farming technologies to increase their yield than rural farmers. Our stochastic dominance analysis (SDA), which analyzes yield volatility, reveals that while rural farmers in the forest and coastal zones experience less volatility in their crop yield, crop yield is highly volatile among rural farmers in the savannah belt. To increase yield among smallholder farmers in Ghana, policy should focus on making credit available to farmers, especially those in the rural areas. Education on the use of technology in farming will help to increase yield and reduce volatility.

The paper examines the impact of the costs associated with regulation on Microfinance Institutions in Ghana. To achieve the paper objective, we use a unique set of field data from 25 Microf...

We examine Day-of-the-Week Effect anomaly and volatility in returns on Ghana Stock Exchange (GSE) and Nairobi Stock Exchange (NSE) using daily closing price indices from 2005 to 2014. Ordinary Least Square regression with autoregressive term, GARCH (1, 1), TGARCH (1, 1) and EGARCH (1, 1) were used. There is no evidence of day-of-the-week effect in GSE but there exists Friday effect in NSE. Daily returns could be predicted in NSE but cannot be predicted in the GSE using past prices and returns information. The GARCH model suggests a high degree of persistent in the conditional volatility of daily stock returns in NSE. The TGARCH and EARCH models show no evidence of asymmetry in daily returns in NSE. However, there was no evidence of conditional volatility for GSE-CI. The two markets are inefficient and whiles day of the week effects are irrelevant in making investment decisions in GSE it is relevant in NSE. Reduction in trade settlement periods to t + 1 and promoting internet usage will make market information freely available to all investors hence making the markets more efficient.

Sources of economic growth in Ghana have not been clear. Several studies have contributed to the finance and growth literature with little attention on remittances and the joint effect of financial sector development and remittances. This paper uses macrodata to examine the linkages between financial development, remittances, and economic growth in Ghana. We estimate a dynamic heterogeneous Autoregressive Distributed Lag (ARDL) model to show that financial booms are not, in general, growth-enhancing, and a certain level of financial development can drag down economic growth in the long term and the combined effect of financial development and remittances should be of concern to policymakers.

The objective of this study is to examine the impact of mobile money (m-money) adoption on some household outcomes such as farm output, welfare (consumption expenditure), and wealth (value of assets). Using primary data collected from three districts in Ghana, three Propensity Score Matching methods were employed to estimate the m-money adoption effect on the household outcomes. It is found that advertisements and higher than basic levels of education, among other variables, were important in influencing the adoption of m-money among smallholder farmers. The adoption of m-money was also seen to have an enhancing effect on the household outcome variables (farm output, welfare, and wealth) of smallholder farmers. The results suggest that mobile money can help enhance some of the smallholder economic outcomes that are relevant for rural development and poverty reduction. Policy options should consider expanding m-money services to smallholder farmers in rural areas.

The effectiveness of health insurance in removing barriers to the utilisation of maternal healthcare in order to curb maternal mortality especially in developing countries is gaining ground. However, in assessing the effects of health insurance on choice of delivery facilities, previous studies either put all delivery services together and used binary techniques or failed to address endogeneity problem. Moreover, the age of data used for such analysis in Ghana may not tell a convincing story. This study used data from the 2014 to 2008 Ghana Demographic and Health Surveys with a sample of 6319 women and employed multinomial endogenous treatment effects models with Conditional Mixed Process estimator to examine the effects of national health insurance scheme (NHIS) on the choice delivery facility in Ghana. We found that NHIS has varied effects on the use of delivery services across service providers in the health system. Relative to home delivery services, being insured increases the probability of using public hospitals, public clinics and private health facilities for delivery by 20.3 percent, 9.1 percent and 2.3 percent respectively. Moreover, relative to an insured woman who gave birth before 2008, her counterpart who gave birth after 2008 is 6.3 percent, 4.9 percent and 0.77 percent more likely to use public hospitals, public clinics and private health facilities respectively for delivery.

This paper sets out to provide a detailed transmission mechanism between multiple borrowing and over-indebtedness and to link over-indebtedness to microcredit addiction using desktop review and a focus group discussion with microfinance practitioners from Ghana. We find that addiction to microcredit has both supply- and demand-side causes. Some of the supply-side causes include MFIs’ upscaling intentions, unhealthy competition among MFIs, group lending methodology, compulsory savings, and high interest rates and transactions costs. On the demand side, we found factors such as clients’ inability to save for the future, clients’ satisfaction with MFI products and services and multiple borrowing behaviour. If MFIs do not fail in the delivery of their core mandate regarding poverty reduction, clients’ addiction to micro-credit will be reduced substantially.

As an alternative to traditional banking, microfinance has been proved as a tool for reducing poverty and enhancing the livelihoods of its beneficiaries. The key objective of providing microcredit to poor households and low-income groups in society is to enable them to engage in productive activities that will generate some income to cater for their households of which children constitute an important segment. We adopt the treatment effect model on a sample of 500 small business operators from two Districts in the Western and Central Regions of Ghana, to estimate the effect of parental borrowing of microcredit on education and health outcomes of children. Our result suggests that clients’ children are regular in school and healthier than those of non-clients. The study recommends that microfinance institutions should integrate child education and health products into the traditional microfinance programmes. These products should target low-income households to promote their human capital development needs.

The paper uses two rounds of survey to examine the relative returns to micro-credit for small-scale businesses in two regions of Ghana. Propensity scores matching and the nearest neighbour matching are used to assess the return to micro-loans on retail businesses of clients and non-clients. Micro-credit impacts on sales, stock, expenses and profit for clients as compared with non-clients. Women-owned businesses produce higher returns from micro-credit than men-owned businesses. Individual and enterprise characteristics influence access to micro-credit. The paper offers policy recommendations to microfinance institutions on whom and which business activity to give credit. Copyright © 2015 John Wiley & Sons, Ltd.

This article presents the findings from a 5-week exploratory research project on microfinance in Ghana. The aim of this project was to develop initial hypotheses that can be tested in a follow-up systematic research project. Our preliminary findings are that informality is a major roadblock to successful lending that lenders redirect loans to other, nonexplicit needs and wants thus indicating a different set of priorities than the lenders and that the most successful component of microfinance is not lending but saving. We also found that gender and religion constitute important factors interfering with and potentially distorting successful microfinance practices. Copyright © 2015 John Wiley & Sons, Ltd.

This article presents the findings from a 5-week exploratory research project on micro-finance in Ghana. The aim of this project was to develop initial hypotheses that can be tested in a follow-up systematic research project. Our preliminary findings are that informality is a major roadblock to successful lending; that lenders redirect loans to other, non-explicit needs and wants thus indicating a different set of priorities than the lenders; and that the most successful component of microfinance is not lending, but saving. We also found that gender and religion constitute important factors interfering with and potentially distorting successful microfinance practices.

This brief explores factors that influence crop yield volatility among rural and urban smallholder farmers in Ghana. The data was sourced from the sixth round of the Ghana Living Standard Survey (GLSS 6). The findings showed that while rural farmers in the forest and coastal zones experienced less volatility in their crop yield, rural farmers in the savannah belt experienced high volatility. The study revealed that smallholder farmers who had access to credit obtained 35.5 percent more yield per acre than their counterparts who did not have access to credit. Similarly, smallholder farmers who adopted farming technologies such as improved seeds and fertility-restoring technologies like organic manure, had about 65.7 percent more yield per acre than farmers who did not adopt any farming technology. To increase yield among smallholder farmers in Ghana, policy should focus on making credit available to farmers, especially those in the rural areas. Measures to enhance adoption of farming technologies such as organic manure, improved seeds, modern agricultural machinery and education of smallholder farmers on their use and importance, would help increase yield and reduce volatility.

The paper answers the question of whether poverty, employment status and demographic characteristics matter in the demand for insurance in Ghana. Using binary logit estimation on the GLSS6 data, we found that the poor have a lower probability of demand for insurance, with locational influence being more pronounced for the poor in the rural areas, while formal salaried workers have higher demand for insurance than self-employed. Again, residents in small cities and rural areas purchase more insurance than metropolitan residents and also, the influence of employment status is more of a rural phenomenon than an urban one. Demand for insurance differ depending on poverty and employment status. Policy must focus on segregating the insurance market to cater for different classes of people.

Violence against women seems to be more of an economic than a sociological problem. In Ghana, no study has investigated the economic causes of domestic violence against women. The chapter seeks to investigate the economic factors that are likely to drive domestic violence among married couples. The study uses a survey of 260 married women from selected communities around the University of Cape Coast. Due to the nature of the measurement of domestic violence, the study adopts the binary logit model to estimate the key economic variables that affect the likelihood of being subjected to domestic violence. Average income, property ownership, economic activities, and their interactions seem to drive domestic violence after controlling for some household covariates. It is found that income and a combination of being economically engaged and owning an asset significantly affected domestic violence at their desired level of significance. Stemming from this, the authors call on the appropriate authorities to make credit facilities available to women to enable them to be economically engaged. Empowering women through the provision of micro-credit facilities has the potential to reduce the economic dimensions of domestic violence.

Less attention has been given to well-being and other household characteristics that influence clients’ access to micro-credit among women households especially. The paper investigates the determinants of access to credit by 320 women entrepreneurs in the Mfantsiman Municipality in the Central Region of Ghana. Data for the study was collected in June-July 2010 from six communities including Mankessim, Saltpond, Anomabu, Biriwa and Yamoransa. Sturctured questionnaires were used to collect the data from women entrepreneurs. The results of the study indicate that clients’ well-being influences access to credit amount. Clients who have been in business for long time are likely to access larger loan amounts. Marital status and education do not influence access to credit. Among the recommendations are that microfinance should not only target clients with high well-being scores but those with low well-being scores since the original aim of microfinance is to lift the poor out of poverty. It is important to give credit to aged business owners instead of young ones. Giving credit to married women because their husbands could serve as guarantors does not matter much but rather women who do not have husbands also need to benefit from micro-credit.

Despite the conviction that microfinance is able to reduce poverty among low income groups, one challenge that still remains in the sector is high default rate. One of the major causes of this situation seems to be the involvement of management, staff and board in loan processing and approval. The current study seeks to explore the cost of retrieving bad loans as a result of taking court actions against clients. The study adopts the qualitative approach to analyze the data from selected MFIs in Ghana. The use of good money for chasing bad money is unprofitable for MFIs. At least MFIs spend about 10.7% of their good money to chase bad money. This has the effect of minimizing the value of shareholders’ wealth and as a consequence reduces profitability. In all the institutions interviewed, there is no code of ethics on loans for the board and management. Among the recommendations include the sale of outstanding debts to debt collection agencies (DCA) which is uncommon in Ghana at a fee less than cost of court actions. Board, staff and management are strongly encouraged to desist from the practice of influencing loan application and approval processes for friends and relations. There should be a high level of trust between board members and that board members should be ethical and have high level integrity.

Youth unemployment is a major setback to sustainable growth. In recent times, Ghana has experienced a downward trend in youth employment in spite of several attempts made by the government to control the unemployment situation. This paper explores savings behaviour, entrepreneurial trait and the decision to be self-employed among students from selected public and private universities in Ghana. Employing the bivariate analysis and probit model on a sample of 1046 students shows that savings behaviour among the youth varies according to their programmes of study, type of institution (public and private) and family background of the students. Savings and entrepreneurial trait increase the probability of self-employment decision among university students. Policies that can address graduate unemployment should focus on helping students to save while in school. Also, incorporating entrepreneurial training into the academic programmes of these institutions has the tendency of improving the entrepreneurial traits of students and thereby, decide to be self-employed. Policy intervention needs to be designed strategically to target students into self-employment as a way of curbing youth unemployment in Ghana in order to contribute to national development.

Microfinance has been heralded by many as the magic bullet, able to empower marginalized populations by investing into their agency. It has been growing at an average rate of about 40%, and providers have shown interest in reducing HIV prevalence and promoting health educational attainment among beneficiaries’ children especially among women who are vulnerable in most societies. Advocates of microfinance interventions have often stated it aims at improving lives by enabling clients to launch and nurture their own small businesses and enterprises so that they can become independent and improve their livelihoods. However, complementary to microfinance strategy is to assist clients in generating income and growing assets from the impact of crises events such as HIV and related diseases such as malaria and tuberculosis. Sub-Saharan Africa as compared to the rest of the world faces a serious HIV epidemic and the poor in general and women in particular are mostly at risk. This group of people is also the target for microfinance initiatives. The study reviews some theoretical and empirical literature about poverty, HIV and microfinance. The chapter establishes the fact that if microfinance can reduce poverty then it could also be used as a tool for preventing HIV infection. Policy recommendation that will enable microfinance institutions to contribute to the prevention of HIV, and its related diseases are offered.

Contrary to the confidence in the ability of microfinance to uplift the poor on the social structure so that upon reaching a higher echelon, the poor (clients) will be able to save and borrow from formal financial institutions (FFIs), most of the poor and socially vulnerable have now become addicted to micro-credit due to demand and supply-side factors. What could be the possible causes of this micro-credit addiction? The objective of this paper was to unravel the causes of what we call “microcredit addiction” and provide recommendations that will enable the addicted clients to break away from this craving. The paper reviews literature on social and financial impact of microfinance and finds that failure of microfinance in the delivery of its core mandate of poverty reduction results in clients’ addiction to micro-credit and, eventually, inhibits their social and financial mobility. The upscaling intentions of MFIs, compulsory savings, high interest rates and transactions costs, multiple borrowing, client’s inability to save for the future and, surprisingly, clients’ satisfaction with MFIs’ products and services are among the factors that make clients get addicted to micro-credit.

Many loan applicants and households face the problem of loan refusal but researchers passively discuss it and do not consider discussing its intensity. This paper uses the fifth round of the Ghana Living Standards Survey data, employing the logit and Poisson regression models on loan refusal as binary and count variables respectively. The econometric analysis of 1,600 and 1,591 households for the loan refusal and intensity of loan refusal respectively shows that income and savings inversely relate to loan refusal and the intensity of loan refusal. The dominance analysis also showed that in Ghana, household savings causes loan refusal and intensity of loan refusal more than household income. We call on financial institutions to widen their coverage, in general, and more in the rural areas so as to increase the stock of loanable funds readily available to prospective applicants, with more flexibility for rural dwellers.

The role of oil and gas exploration and other natural resources in the economic development of a country cannot be over emphasized. Unfortunately, in most oil producing countries women have not benefited from oil and gas exploration. This study therefore seeks to explore the effects of the oil find in Ghana on the livelihood of women in the catchment area of Cape Three Points. Purposive sampling was used to select two hundred and forty respondents who were interviewed in two communities at Cape Three Points about their anticipated challenges and prospects in the wake of the oil find. Results indicate that more than half of the respondents perceive a decrease in fish catch, loss of jobs for husbands and reduction in income levels. It is recommended that in order for women to take advantage of the oil find, there is the need to create alternative livelihoods such as access to finance; capacity building; training and development; and technical services for women in the catchment area.

The back bone of the Ghanaian economy is agriculture. The sector is the main source of staple food and vegetables. Even though most studies have investigated technical efficiency of some staple crops in Ghana, not much investigation has been carried out on technical efficiency of vegetables growers. The study estimates the technical efficiency of 100 vegetable (garden eggs, pepper and tomatoes) growers using the stochastic frontier function. Results indicate that mean technical efficiency is 0.748 with minimum and maximum values of 0.623and 0.897 respectively. The study revealed that 40.2% of farmers produce at efficiency level of 0.71-0.75. A good mix of inputs improves vegetable production but do not significantly determine yield. Access to credit by farmers is an important source of technical efficiency. Policy implications drawn from the results include a review of agricultural loan policies from the government banks, private banks and microfinance institutions (MFIs) to increase credit access to smallholder vegetable growers.