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Does Access and Use OF Financial Service Smoothen Household Food Consumption?


  • Annim, Samuel Kobina
  • Dasmani, Isaac
  • Armah, Mark


The study relies on Ghana’s Living Standard Measurement Survey to test the hypothesis of no relationship between credit and household food consumption expenditure. We use single stage and pooled least squares given the non-availability of national panel data in Ghana and lack of better instruments in the Living Standard data. While cognisant of the adverse effect of endogeneity we observe that our finding fails to provide enough evidence to reject the null hypothesis. This suggests that access to credit does not contribute to the smoothening of household consumption. This observation cuts across different sub-samples based on socio-economic classification. We recommend caution in propagating the ability of credit in smoothening consumption.

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  • Annim, Samuel Kobina & Dasmani, Isaac & Armah, Mark, 2011. "Does Access and Use OF Financial Service Smoothen Household Food Consumption?," MPRA Paper 29278, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:29278

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    References listed on IDEAS

    1. Joachim von Braun, 2008. "Rising Food Prices: What Should Be Done?," EuroChoices, The Agricultural Economics Society, vol. 7(SpecialIs), pages 30-35, August.
    2. Strauss, John, 1982. "Determinants of food consumption in rural Sierra Leone : Application of the quadratic expenditure system to the consumption-leisure component of a household-firm model," Journal of Development Economics, Elsevier, vol. 11(3), pages 327-353, December.
    3. Morduch, Jonathan, 2002. "Consumption Smoothing Across Space: Testing Theories of Risk-Sharing in the ICRISAT Study Region of South India," WIDER Working Paper Series 055, World Institute for Development Economic Research (UNU-WIDER).
    4. Claessens, Stijn, 2006. "Access to financial services: a review of the issues and public policy objectives," Journal of Financial Transformation, Capco Institute, vol. 17, pages 16-19.
    5. Strauss, John, 1984. "Joint determination of food consumption and production in rural Sierra Leone : Estimates of a household-firm model," Journal of Development Economics, Elsevier, vol. 14(1), pages 77-103.
    6. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    7. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
    8. Kochar, Anjini, 1995. "Explaining Household Vulnerability to Idiosyncratic Income Shocks," American Economic Review, American Economic Association, vol. 85(2), pages 159-164, May.
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    Cited by:

    1. Koomson, Isaac & Annim, Samuel Kobina & Peprah, James Atta, 2014. "Loan Refusal, Household Income and Savings in Ghana," MPRA Paper 58049, University Library of Munich, Germany.
    2. Isaac Koomson & Samuel Kobina Annim & James Atta Peprah, 2016. "Loan refusal, household income and savings in Ghana: a dominance analysis approach," African Journal of Economic and Sustainable Development, Inderscience Enterprises Ltd, vol. 5(2), pages 172-191.

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    JEL classification:

    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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