The Impacts of Access to Finance on Household Welfare: A Mixed Methods Approach for Women and the Youth in The Gambia

Poor access to finance remains one of the key challenges faced by households and businesses in The Gambia, in the face of an underdeveloped financial market. With up to 69% of the population remaining financially excluded, women and the youth are further disadvantaged as they are reported to face peculiar challenges in access to finance, in spite of efforts taken by the government. This study, therefore, examined the impacts of various forms of finance for these marginalized groups by supporting quantitative analyses from the Third Integrated Household Survey (IHS3) data with some qualitative information. Adopting the endogenous regime switching (ERS) regression approach, due to non-randomness of access to finance, the study found that access to credit generally improves welfare of women and youth households, especially in terms of income and non-food consumption expenditure. However, in the current administrative system of formal finance, access to finance reduces food consumption expenditure, especially for women. For the youth, estimates of treatment effects show that informal credit is welfare-degrading, especially in terms of total consumption expenditure. Various policy implications are drawn from the results.