Financial Literacy and Household Saving Behaviour in Ghana: A Three-Component Framework for Financial Inclusion

This study examines the determinants of household saving behaviour in Ghana, with particular focus on financial literacy and broader dimensions of financial inclusion. Using nationally representative data from the FinScope Consumer Ghana Survey in 2021, we develop a novel three-component framework that disaggregates financial inclusion into financial literacy, financial access, and behavioural biases. Employing an instrumental variable approach to address endogeneity concerns, we find that financial literacy significantly influences saving behaviour, with its effect varying across demographic subgroups. Financial access consistently plays a prominent role in shaping saving decisions. In some contexts, behavioural biases, such as trust and stigma, also serve as strong determinants. Our findings contribute to the literature in a three-fold manner. Primarily, by developing a three-component framework for financial inclusion which can be replicated across developing and developed contexts. Secondly, by providing credible causal identification through a structured auxiliary evidence framework for instrument validation. Thirdly, by offering policy-relevant insights for Ghana’s National Financial Inclusion and Development Strategy. Our results suggest that targeted interventions, addressing specific components of financial inclusion, may be more effective than broad-based approaches currently at play.