Financial Inclusion and Poverty Incidence in Ghana: The Moderating Role of Gender, Location and Household Size

Abstract

The main aim of the study is to investigate the relationship between financial inclusion and poverty incidence and how gender, location and household size conditions the relationship. The study employed a quantitative approach and an explanatory design to explore the relationships among the variables. Secondary data was obtained from the Ghana Living Standards Survey (2017) and the logistic regression and bivariate probit models were used for the estimations. The results revealed that financial inclusion significantly reduces poverty incidence in Ghana irrespective of the proxy adopted for financial activities. In terms of effectiveness, it was observed that savings had the greatest impact on poverty incidence followed by loans and then insurance. Poverty was also, found to have negative effects on households’ likelihood to purchase an insurance policy. The results further suggested that the gender of the household head, location of household head, and the size of the household significantly moderate the effects of financial inclusion on poverty incidence. The household size indicate an inverted U-shape relationship with poverty incidence in the presence of financial inclusion. Household heads in the Savannah zone benefited less from the impacts of financial inclusion on poverty incidence as compared to those in the Coastal and Forest zones. Financial inclusion was found to benefit male-headed households more than female-headed households. The study, therefore, recommends that savings and loans must be the target of policy makers in reducing poverty incidence in areas where poverty incidence is high in Ghana. The Central Bank must create a specialized inclusion program in the Savannah zone of Ghana to reduce poverty incidence in the area.