Financial Inclusion, Subjective Social Welfare And Mental Health In Ghana

Abstract

This paper examines the effect of financial inclusion on mental health and subjective social welfare in Ghana. It also makes the first attempt to examine how subjective social welfare influences the relationship between financial inclusion and mental health. Data from the Ghana Socio-economic Panel Survey was utilized. Mental health was proxied by depression. The study utilized the Fixed Effect Model for the baseline specification and the IV method to solve issues of endogeneity. The results show that financial inclusion significantly reduces depression by approximately 1.86 points. Additionally, there is an improvement in individuals' subjective social welfare, reflecting increases of 2.21 and 1.27 points at the community and national levels, respectively. Using the Structural Equation Model for mediation analysis, we reveal that subjective social welfare at the community level partially mediates the financial inclusion-depression nexus. The results of this study support mounting evidence that inclusive finance reduces the symptoms of depression and increases subjective social welfare, aligning with the Sustainable Development Goal (SDG) 3, which aims to promote mental health and well-being.