Financial Literacy, Financial Inclusion and Stock Market Participation in Ghana

Abstract

This thesis explores the impact of financial literacy and financial inclusion on stock market participation in Ghana. It employs a sample of 1,966 respondents sampled across the 10 regions of Ghana for the period 2018.This thesis employs biprobit models to estimate the influence of financial literacy on financial inclusion. To analyse the independent effect of financial literacy and financial inclusion on stock market participation as well as their joint effect, this thesis employs robust probit models. The following empirical findings emanate from this thesis: financial literacy positively and significantly affects financial inclusion. Second, the thesis does not support previous findings that financial literacy is not a significant determinant of stock market participation in Ghana. Third, the thesis finds that financial inclusion through using an account to save affects stock market participation significantly. Finally, the interaction of financial literacy and financial inclusion on stock market participation provides evidence of no significant impact. The thesis makes appreciable contribution to literature: the analysis of the effect of financial inclusion on stock market participation is new in literature. Furthermore, the interaction of financial literacy and financial inclusion on stock market participation is novel in literature. The thesis provides evidence of the need for financial inclusion policy initiatives to be backed by financial literacy in Ghana. Further, it provides evidence on the need to bridge the financial inclusion gender gap in Ghana for holistic financial development. This thesis also shows the need for creating awareness, protecting financial consumers’ rights and also educating individuals on the securities traded on the Ghana Stock Exchange.