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Understanding the Determinants of Saving in Ghana: Does Financial Literacy Matter?

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  • Samuel Tawiah Baidoo
  • Elliot Boateng
  • Mary Amponsah

Abstract

Domestic savings remain low in Ghana despite several attempts to improve this situation. Whereas existing studies on private savings have identified several determinants, the role of financial literacy in saving decisions has not been explored. In this paper, we build on existing studies and provide evidence supporting our hypothesis that financial literacy is key to promoting domestic saving. The study relies mainly on primary data, and the binary probit regression model is employed as the estimation technique. Our results show that improving financial literacy among Ghanaians should be incorporated into the broad policy package aimed at increasing domestic saving which is a prerequisite for investment and subsequently sustainable economic growth. Copyright © 2018 John Wiley & Sons, Ltd.

Suggested Citation

  • Samuel Tawiah Baidoo & Elliot Boateng & Mary Amponsah, 2018. "Understanding the Determinants of Saving in Ghana: Does Financial Literacy Matter?," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(5), pages 886-903, July.
    • Handle: RePEc:wly:jintdv:v:30:y:2018:i:5:p:886-903
    DOI: 10.1002/jid.3377
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    Cited by:

    1. Manh Hung Do, 2023. "The Role of Savings and Income Diversification in Households’ Resilience Strategies: Evidence from Rural Vietnam," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 168(1), pages 353-388, August.
    2. Samuel Owusu & Samuel Tawiah Baidoo, 2021. "Providing a safety net for the vulnerable persons in Ghana: Does the extended family matter?," International Journal of Social Welfare, John Wiley & Sons, vol. 30(2), pages 208-215, April.
    3. Soumyadeep Banerjee & Abid Hussain & Sabarnee Tuladhar & Arabinda Mishra, 2019. "Building capacities of women for climate change adaptation: Insights from migrant-sending households in Nepal," Climatic Change, Springer, vol. 157(3), pages 587-609, December.
    4. Solomon Antwiagyei Kuffour & George Adu, 2019. "Financial Literacy, Trust and Stock Market Participation in Ghana," Economics Literature, WERI-World Economic Research Institute, vol. 1(2), pages 101-116, December.
    5. Thereza Balliester Reis & Vincent Mugo Kamau, 2023. "Are low-income workers financially irresponsible? An analysis of financial and accounting practices in Nairobi," Working Papers 260, Department of Economics, SOAS University of London, UK.
    6. Mohammed Amidu & Joshua Yindenaba Abor & William Coffie & Agnes Akpene Akakpo, 2021. "Financial Inclusion, Livelihood Activities, and Stock Market Participation," Emerging Economy Studies, International Management Institute, vol. 7(1), pages 23-61, May.
    7. Çağaçan DEĞER & Elif ERER, 2020. "Social Security Membership and Saving: The Turkish Case," Sosyoekonomi Journal, Sosyoekonomi Society, issue 28(43).
    8. Samuel Tawiah Baidoo & Hadrat Yusif, 2019. "Does Interest Rate Influence Demand for Money? An Empirical Evidence from Ghana," Economics Literature, WERI-World Economic Research Institute, vol. 1(1), pages 24-36, June.
    9. Ancuța Lucaci & Carmen Năstase, 2023. "Financial literacy and employment: an overview and bibliometric analysis," Journal of Financial Studies, Institute of Financial Studies, vol. 8(Special-J), pages 129-150, June.
    10. Morgan, Peter J. & Long, Trinh Quang, 2020. "Financial literacy, financial inclusion, and savings behavior in Laos," Journal of Asian Economics, Elsevier, vol. 68(C).
    11. Manh Hung Do, 2023. "Saving up and diversifying income for a rainy day: Implications for households' resilience strategies and poverty," TVSEP Working Papers wp-033, Leibniz Universitaet Hannover, Institute of Development and Agricultural Economics, Project TVSEP.
    12. Martinson Ankrah Twumasi & Yuansheng Jiang & Zhao Ding & Pengcheng Wang & Wonder Abgenyo, 2022. "The Mediating Role of Access to Financial Services in the Effect of Financial Literacy on Household Income: The Case of Rural Ghana," SAGE Open, , vol. 12(1), pages 21582440221, February.

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