Financial Inclusion on Poverty Alleviation in Ghana: Assessing the Impact of Mobile Money and Banking

Abstract

This study examined the impact of mobile money and banking services on poverty alleviation in Ghana. In recent years, mobile money and banking services are argued to increase financial inclusion, especially in developing economies. The penetration of these services is therefore also theorized to reduce poverty significantly. However, despite the increasing penetration of banking and mobile money services in Ghana, there are limited studies assessing how the two impact on poverty alleviation. There is therefore the need for more empirical research to be conducted to provide evidenced-based information to guide financial inclusion policy regulations and practice. The current study therefore empirically examining how mobile money and banking services have affected poverty reduction between 2004 and 2017. Poverty level were measures as savings culture, access to finance and cashless transactions. Secondary data from Global Financial Index Database (also called Global Findex) and the Inter-University Consortium for Political and Social Research (ICPSR) were used, involving a sample of 832 participants. Findings showed that access traditional banking improved savings culture and access to finance. Specifically, rural bank and microfinance increased savings and access to finance among low income individuals. Mobile money services increased cashless transactions among the individuals. Together, these findings suggest that financial inclusion strategies have differential effects on poverty level among low income individuals, which calls for more nuanced policy initiatives.

Keywords: financial inclusion, mobile money, traditional banking, poverty reduction, Ghana