The financial inclusion agenda: Examining the role of conventional banks in deepening access to formal credit

Abdul Malik Iddrisu and Michael Danquah

Economic Systems, 2024, vol. 48, issue 2

Abstract: Using a unique district-level panel dataset, we investigate the effect of banking system penetration on financial inclusion in Ghana. To purge potential endogeneity bias in the underlying relationship, we exploit a change in the policy environment of the Ghanaian banking system to instrument for bank branch expansion. We show, first, that the switch from the compartmentalized system of banking to the universal banking system in Ghana has resulted in an expansion of banks’ branch network, which has benefited hitherto financially less developed districts. Second, our instrumental variable evidence suggests that banking system penetration promotes financial inclusion—notably, access to bank credit and to formal credit. The results of this paper provide important insights into the role of policy in enhancing financial inclusion.

Keywords: financial sector development; bank branch expansion; financial inclusion; pseudo panel; Ghana (search for similar items in EconPapers)
JEL-codes: C23 G21 G28 O16 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0939362524000244
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:48:y:2024:i:2:s0939362524000244

DOI: 10.1016/j.ecosys.2024.101202

Access Statistics for this article

Economic Systems is currently edited by R. Frensch

More articles in Economic Systems from Elsevier Contact information at EDIRC.
Bibliographic data for series maintained by Catherine Liu ().