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The Impacts of Improvements in the Delivery of Credit from Formal and Semi-Formal Financial Institutions: Evidence from Ghana

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  • Samuel Amponsah

    (Institute for International Strategy, Tokyo International University)

Abstract

This study examines the impacts of improvements in delivery of credit from formal and semi-formal financial institutions to households in Ghana. The main interest of the study is to exploit plausibly variations in access to credit from these institutions, since before the passage of the Borrowers and Lenders Act, 2008 (Act 773) and the Non-Bank Financial Institutions Act, 2008 (Act 774) in 2008, households in the country could hardly borrow from the formal financial institutions. Particular attention is paid to a number of socioeconomic outcomes, including agriculture, non-farm businesses, and expenditure. This paper documents evidence of a decline in the share of households who have some informal borrowing, reduction in agricultural activities, and increases in non-farm business activities as well as increases in the number of non-farm business employees. While the reforms altered the borrowing patterns of households, it did not necessarily induce demand for credit. This paper also finds improvements in consumption, profits (both farm and non-farm activities) and loan repayments.

Suggested Citation

  • Samuel Amponsah, 2017. "The Impacts of Improvements in the Delivery of Credit from Formal and Semi-Formal Financial Institutions: Evidence from Ghana," Journal of African Development, African Finance and Economic Association (AFEA), vol. 19(2), pages 33-66.
    • Handle: RePEc:afe:journl:v:19:y:2017:i:2:p:33-66
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    Citations

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    Cited by:

    1. Simplice A. Asongu & Nicholas M. Odhiambo, 2019. "Governance, capital flight and industrialisation in Africa," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 8(1), pages 1-22, December.
    2. Simplice A. Asongu & Nicholas M. Odhiambo, 2020. "Finance, governance and inclusive education in Sub-Saharan Africa," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 17(8), pages 1044-1061, July.
    3. Asongu, Simplice A. & Nnanna, Joseph & Acha-Anyi, Paul N., 2020. "Inequality and gender economic inclusion: The moderating role of financial access in Sub-Saharan Africa," Economic Analysis and Policy, Elsevier, vol. 65(C), pages 173-185.
    4. Simplice A. Asongu & Nicholas M. Odhiambo, 2018. "ICT, Financial Access and Gender Inclusion in the Formal Economic Sector: Evidence from Africa," The African Finance Journal, Africagrowth Institute, vol. 20(2), pages 45-65.
    5. Simplice Asongu & Oludele Folarin & Nicholas Biekpe, 2019. "The stability of demand for money in the proposed Southern African Monetary Union," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 15(2), pages 222-244, August.
    6. Asongu, Simplice A. & Nnanna, Joseph & Acha-Anyi, Paul N., 2020. "Finance, inequality and inclusive education in Sub-Saharan Africa," Economic Analysis and Policy, Elsevier, vol. 67(C), pages 162-177.
    7. Asongu, Simplice & Nnanna, Joseph & Acha-Anyi, Paul, 2020. "Inclusive Education for Inclusive Economic Participation: the Financial Access Channel," MPRA Paper 103151, University Library of Munich, Germany.
    8. Asongu, Simplice A. & Folarin, Oludele E. & Biekpe, Nicholas, 2019. "The long run stability of money demand in the proposed West African monetary union," Research in International Business and Finance, Elsevier, vol. 48(C), pages 483-495.

    More about this item

    Keywords

    Households’ access to credit· Formal and Semi-formal financial institutions· Difference-indifference;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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