Inclusive finance, financial literacy and livelihood activities of households in Ghana

Mohammed Amidu, Joshua Yindenaba Abor and Haruna Issahaku

Chapter 14 in Inclusive Financial Development, 2021, pp 293-318 from Edward Elgar Publishing

Abstract: This paper examines how financial literacy affects the relationship between financial inclusion and livelihood activities of people in Ghana. The empirical approach is conducted in two stages: first, to overcome the problem of self-selection and the attendant endogeneity problem, a biprobit model is employed to explore the relationship between financial inclusion, and financial literacy. Second, we use two stage least squares and robust probit methods to assess the impact of financial inclusion and financial literacy on income and livelihood activities. We find the following results: First, financial literacy increases financial inclusion in Ghana. Second, interaction of financial inclusion with financial education improves livelihood of households. These findings imply that inclusive finance resulting from the acquisition of financial knowledge promotes sustainable livelihood in Ghana.

Keywords: Development Studies; Economics and Finance (search for similar items in EconPapers)
Date: 2021
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