Inclusive finance, bank pricing behaviour, and livelihood activities of households in Ghana
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Inclusive finance, bank pricing behaviour, and livelihood activities of households in Ghana Vera Ogeh Lassey Fiador1 · Mohammed Amidu2 Received: 18 June 2020 / Accepted: 16 October 2020 © Springer Nature Switzerland AG 2020
Abstract This paper examines how bank pricing behaviour affects the relationship between financial inclusion and livelihood activities using a sample of households that covers many regions of Ghana. The empirical approach is conducted in two stages: first, we employ a biprobit model to explore the relationship between financial inclusion and individual livelihood activities. Second, we use two-stage least-squares and robust probit methods to assess the effect of inclusive finance on livelihood activities in the light of pricing behaviour of banks. Our results reveal that individual households who have a source of livelihood are motivated to have an account with a bank if they perceive the possibility of having higher income from their accounts. The results also suggest that individuals have a higher chance of earning more income when they are included financially by means of owning accounts, using their accounts to save, having access to credit, and making frequent withdrawals and payments using their accounts. Keywords Banks · Financial inclusion · Livelihood · Bank pricing strategy · Developing country JEL Classification G21 · D14 · I3 · C36
* Mohammed Amidu [email protected] Vera Ogeh Lassey Fiador [email protected] 1
Department of Finance, University of Ghana Business School, Legon, Accra, Ghana
2
Department of Accounting, University of Ghana Business School, Legon, Accra, Ghana
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Introduction Literature suggests that inclusive finance is linked to the growth and development of economies (Khaki and Sangmi, 2017; Masiyandima et al. 2017; Klapper et al. 2016; Choudhury 2015). Financial inclusion is seen to play a key role in building the foundations of a country’s infrastructure which in turn leads to economic growth and development (Sharma 2016). Most studies assert that financial inclusion is driven by bank behaviour thus have sought to establish the nexus between bank pricing behaviour, financial inclusion, and economic growth and development (Okello et al. 2018; Chikalipah 2017; Kaiser and Menkhoff 2017). On one hand, Sharma (2013) argues that financial inclusion provides the population at the bottom of the pyramid with easy financial access, which leads to banks catering for their financial needs. More so, financial inclusion facilitates the flow of funds from savers to borrowers. This efficient flow of funds largely leads to a sustainable, efficient, and effective financial system and eventually to the financial stability of the society. Again, Veerashekharappa and Vani (2015) maintain that financial inclusion ensures physical access to banking facilities to the poor and unbanked population and has proven to pave the way for livelihood formation. Demirgüç-Kunt and Klapper (2012) suggest that financial inclusion e
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