Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/243400 
Year of Publication: 
2021
Series/Report no.: 
WIDER Working Paper No. 2021/74
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
Abstract: 
Using a unique district-level panel data set, we investigate the effect of banking system penetration on financial inclusion in Ghana. To purge potential endogeneity bias in the underlying relationship, we exploit a change in the policy environment of the Ghanaian banking system to instrument for banking system penetration. We show, first, that the switch from a compartmentalized system of banking to a universal banking system in Ghana has resulted in an expansion of banks' branch networks, which has benefited hitherto financially less developed districts. Second, our instrumental variable evidence suggests that banking system penetration promotes financial inclusion-notably, access to bank credit and to formal credit. The results of this paper provide important insights into the role of policy in enhancing financial inclusion.
Subjects: 
financial sector development
banking system penetration
financial inclusion
pseudo panel
Ghana
JEL: 
C23
G28
G21
O16
Persistent Identifier of the first edition: 
ISBN: 
978-92-9267-012-2
Document Type: 
Working Paper

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