Measuring usage of formal financial services as a proxy for financial inclusion: A case of agricultural households in Ghana
ISSN: 0002-1466
Article publication date: 6 March 2020
Issue publication date: 1 July 2020
Abstract
Purpose
Financial inclusion is an issue of importance and increasing concern worldwide, particularly to policymakers across Africa and the rest of the developing world. The purpose of this paper is to investigate the level of usage of formal financial services among Ghanaian agricultural households as well as factors influencing these levels.
Design/methodology/approach
Financial inclusion indicators associated with the usage of formal financial services are selected from the 2017 Ghana Living Standard Survey. Using these indicators, an index measuring the level of usage of formal financial services is developed. A multinomial logistic regression model is implemented to analyze the possible effect that farm and household characteristics have on index measures.
Findings
Usage of formal financial services is very low among agricultural households, with many households using no financial products or services. Household expenditure, education, religion, geographic location, and the use of informal financial services were found to be consistent factors impacting household financial inclusion levels.
Practical implications
Findings may assist policymakers in designing policy schemes aimed at improving access to and usage of financial services for Ghanaian agricultural households. This may lead to a more inclusive financial system with the potential to improve the livelihood of agricultural households and contribute to Ghana's overall economic development.
Originality/value
A household-level index measuring usage of formal financial services was developed and characteristics influencing said index measures were examined, providing a more holistic view and understanding of factors influencing usage decisions.
Keywords
Acknowledgements
The authors thank two anonymous reviewers and the AFR editorial team for their helpful feedback and suggestions.
Citation
Mohammed, F., Barrowclough, M.J., Kibler, M.L. and Boerngen, M.A. (2020), "Measuring usage of formal financial services as a proxy for financial inclusion: A case of agricultural households in Ghana", Agricultural Finance Review, Vol. 80 No. 4, pp. 471-489. https://doi.org/10.1108/AFR-09-2019-0096
Publisher
:Emerald Publishing Limited
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