Economics at your fingertips  

Improving loan repayment in Ghana: Does financial literacy matter?

Samuel Baidoo, Hadrat Yusif, Enock Ayesu and Walid Mensi

Cogent Economics & Finance, 2020, vol. 8, issue 1, 1787693

Abstract: Loan defaults continue to be a major challenge that confronts financial institutions in developing countries and this impedes their potential role in sustainable development. Given the enormity of loan defaults, policymakers have devoted much attention to the phenomenon by implementing strategies and policies aimed at improving loan repayment to avert the situation. To complement the effort of policymakers, several empirical studies have also been conducted regarding loan repayment determinants; but what is worrying is that none of these studies emphasises the role of financial literacy, especially in the Ghanaian context. This study therefore examines the potential effect of financial literacy on loan repayment. We rely on primary data and employ the binary probit regression for the analysis. The results reveal a positive and significant relationship between financial literacy and loan repayment. This means that enhancing financial literacy improves loan repayment significantly which will in turn ensure sustainability of the financial institutions. The level of education of borrowers is also revealed to play a key role in loan repayment. Given the findings, the study sheds new lights on how loan repayment can be improved to ensure a vibrant banking sector.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link) (text/html)
Access to full text is restricted to subscribers.

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:

Ordering information: This journal article can be ordered from

DOI: 10.1080/23322039.2020.1787693

Access Statistics for this article

Cogent Economics & Finance is currently edited by Steve Cook, Caroline Elliott, David McMillan, Duncan Watson and Xibin Zhang

More articles in Cogent Economics & Finance from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

Page updated 2023-11-30
Handle: RePEc:taf:oaefxx:v:8:y:2020:i:1:p:1787693