No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
Mobile Money as a Tool for Financial Inclusion in Ghana's Post-COVID-19 Context: Key Developments and Future Trajectory
Abstract
The COVID-19 pandemic has significantly disrupted all spheres of life including the financial sector. In developing economies, the high number of people and businesses that fall under the informal sector is something that continues to receive policy attention. The actors within the informal sector are mostly those within the rural or urban poor and the pro-poor population. Mobile money services, which are digitised technologies that allow mobile phone users to access financial services have been improving the state of financial inclusion. This study explores the current state of mobile money usage in Ghana, discussing the issues within the context of COVID-19. The study further provides a futuristic analysis of the emerging developments on the use of mobile money as a tool for enhancing financial inclusion. Essentially, these future projections are provided on the critical issues that need to be considered in a post-COVID-19 context. Although the analysis dwells heavily on Ghana, the issues raised can be applied to the context of other developing economies with similar informal sectors and pro-poor populations.
... Financially inclusive communities with multiple banks offer greater access to financial services, including savings and credit facilities. This enables individuals to better manage their finances, save for emergencies and invest in preventive healthcare, such as regular check-ups and vaccinations (Duho & Quansah, 2021;Littlefield et al., 2003). Moreover, having multiple banking options may foster competition among banks (Rahman & Misra, 2021), leading to improved financial products and services tailored to meet the specific needs of customers, including health-related insurance plans and health savings accounts (Yildirim & Philippatos, 2007;Demirgüç-Kunt et al., 2018). ...
This research analyses the nexus between financial inclusion, digital inclusion and health outcomes in developing countries. In comparison with earlier studies, this study demonstrates an important research gap in addressing the combined impact of these factors. Basically, this research analyses the role of traditional banking and fintech in increasing financial inclusion and ultimately, enhancing health indices in emerging markets. By developing an index based upon the Entropy Weight Method, we show unique insights into bank and fintech-based financial inclusion, health outcomes and digital inclusion in these countries. Our results also show that digital inclusion plays a moderating role on the influence of financial inclusion on health outcomes. We evidenced that well-designed policies emphasising improvement in traditional and digital financial inclusion could potentially improve health outcomes in emerging markets. We also evidenced that improvement in digital inclusion (i.e., adoption of ICT) can facilitate improvement in both digital financial inclusion and health outcomes. Based upon our study, policymakers can utilise the index that we developed to compare health outcomes between different countries as well as to develop effective strategies for improvement in financial and digital inclusion. Our study emphasises the significance of understanding the multifaceted advantages of financial and digital inclusion in the development of health policies particularly in emerging markets.
... This is the case in the Ghanaian financial sector. New technologies are introduced yearly to improve the sector such as electronic cheque clearing system , fintech innovations, mobile money interoperability (Duho & Quansah, 2021;Nyaaba et al., 2018), insurance sector verification database etc. ...
This study seeks to answer the question, what is the right configuration of IT Governance mechanisms that will improve performance? Although few studies have addressed how governance mechanisms improve performance, these studies have adopted a linear approach in assessing the relationships among governance mechanisms. The nature of the linear relationships has not answered the lingering question making this study crucial. The study follows the configurational theories that for IT governance to improve performance, all the governance mechanisms much be implemented coherently. We used Cluster analysis to assess the nature of the configuration in the Ghanaian Financial Services Sector using 7 companies. Our findings confirm our theory that to improve performance, IT Governance mechanisms must be implemented coherently. However, in a fast‐changing environment, there is the need to increase focus on technological mechanisms to provide timely information for decision making, collaboration and reduce information asymmetry. As a contribution to practice, this study recommends that policy makers in the financial space should emphasize the need for adequate IT Governance implementations with the right configuration. Companies in the pension and savings and loan sectors should be encouraged to adopt more technological mechanisms.
The rapid uptake of mobile money in recent years has generated new data needs and growing interest in understanding its impact on broad money. This paper reviews mobile money trends using mobile money data from the Financial Access Survey (FAS) and examines the statistical treatment of mobile money under the IMF’s Monetary and Financial Statistics (MFS) framework. MFS guidance is straightforward in most cases, as many jurisdictions have adopted regulations which ensure that mobile money is captured in the banking system and thus in the calculation of broad money. However, in cases where mobile network operators (MNOs) act as niche financial intermediaries outside the banking regulatory perimeter and are allowed to invest their customer funds in sovereign securities and other permitted assets, mobile money liabilities may remain outside the banking system as well as monetary statistics. In that case, information on mobile money liabilities need to be collected directly from MNOs to account for mobile money as part of broad money.
In many developing countries less than half the population has access to formal financial services, and in most of Africa less than one in five households has access. Lack of access to finance is often the critical mechanism for generating persistent income inequality, as well as slower economic growth. Hence expanding access remains an important challenge across the world, leaving much for governments to do. However, not all government actions are equally effective and some policies can even be counterproductive. This paper sets out principles for effective government policy on broadening access, drawing on the available evidence and illustrating with examples. The paper concludes with directions for future research. Copyright The Author 2009. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org, Oxford University Press.
In Ghana, West Africa, the rise of the COVID-19 pandemic coincided with the national election year. This paper analyses the intersection of pandemic-related fiscal interventions and the electoral calendar, analysing how this temporal confluence shaped the kind of mechanisms of redistribution adopted during the pandemic. The NPP government, known for its right-leaning ‘pro-business’ approach to economic policy-making, designed fiscal interventions that did not effectively address the lower-income sectors of the society, while some of these interventions, including 50% subsidy of water and electricity bills for businesses, appealed to their elite and middle-class voting base. Combining insights from the anthropology of tax and macroeconomics, we raise broader questions about the diversity of tools needed to effectively combat multi-dimensional poverty in Ghana, including the role of direct cash transfers. Ultimately, we argue that Ghana’s pandemic-related fiscal interventions speak to the historical class politics at the heart of state-citizen fiscal relations.
Purpose
This study explores the effect of income diversification strategy on credit risk and market risk of microfinance institutions (MFIs) in Ghana as an emerging market.
Design/methodology/approach
The study is based on quarterly data of averagely 271 MFIs that have operated from 2016 to 2018. The dataset is unbalanced and pooled cross-sectional with 3,259 data points. The study measures the diversification strategy using income diversification indices, and accounting ratios to measure the other variables. We utilised the weighted least squares (WLS) approach to explore the nexus.
Findings
The findings show that income diversification is associated with better loan quality and credit risk management. Market risk increases with the level of income diversification of microfinance firms. It is evident that large MFIs can manage their credit risks well and can have a low default rate, depicting an overall U -shaped nexus. On the other hand, the effect of size on market risk is an inverted U -shaped. The effect of asset tangibility on credit risk is positively significant while the effect on market risk is negatively significant. High profitability enhances credit risk management leading to lower loan losses while in the case of diversified and profitable MFIs, they tend to invest more in government securities. The results suggest that MFIs that hold more cash and cash equivalents tend to have high loan loss provision and more government securities suggesting much attention should be paid to optimal cash management.
Practical implications
The results throw light on the credit risk and market risk profile of the firms and the effect of diversification strategies on them. The findings are relevant for effective macroprudential regulation, market regulation and prudential regulation of the microfinance sector.
Social implications
The findings reveal the nature of income diversification strategy of MFIs in emerging markets such as Ghana, pointing out how they affect the risk exposure of MFIs that lend to the pro-poor population.
Originality/value
This is a premier formal assessment of the nexus between income diversification strategies and risk management among MFIs that serve the pro-poor population in the emerging market context.
This study explores the effect of income diversification on the profitability of microfinance institutions (MFIs) in Ghana. The results indicate that the institutions record low profits and they are generally not so much diversified. Income diversification has a negative effect on return on asset and return on equity, suggesting the preference for a focused strategy. Larger firms are found to be more profitable although there is an inverted U-shaped nexus. Investments in fixed assets are beneficial for enhancing performance among the firms while the findings cast doubt on the extent of financial intermediation. This is because cash and investments in government securities are more than 50 percent of assets while loan levels are scant as compared to deposits. The study calls for MFIs to resort to providing more loans as this will enhance their bottom-line and also improve the economy. The insights from the study lend credence to the relevance of data-driven decision making among MFIs
Fourth Ghana Economic Update: Enhancing Financial Inclusion-Africa Region
- M T Geiger
- K G Kwakye
- C L Vicente
- B M Wiafe
- N Y Boakye Adjei
Geiger, M. T., Kwakye, K. G., Vicente, C. L., Wiafe, B. M., & Boakye Adjei, N. Y.
(2019). Fourth Ghana Economic Update: Enhancing Financial Inclusion-Africa
Region. Ghana Economic Update; No. 4 Washington, D.C.: World Bank Group.
How COVID-19 is Affecting Firms in Ghana: Results from the
GSS, (2020a). How COVID-19 is Affecting Firms in Ghana: Results from the Business
Tracker Survey. Ghana Statistical Service, Accra, Ghana.
How COVID-19 is affecting firms in Ghana: Results from the Business Tracker Survey -Wave 2
GSS, (2020b). How COVID-19 is affecting firms in Ghana: Results from the Business
Tracker Survey -Wave 2. Ghana Statistical Service, Accra, Ghana.
National Financial Inclusion and Development Strategy (NFIDS
- Mof
MoF, (2018). National Financial Inclusion and Development Strategy (NFIDS) 2018-2023. Ministry of Finance, Accra, Ghana.
Financial inclusion research around the world: A review
- P K Ozili
Ozili, P. K. (2020). Financial inclusion research around the world: A review. In Forum
for social economics (pp. 1-23). Routledge.
Farmers' Club: A mobile agriculture service by Vodafone Ghana
- T Palmer
- N Darabian
Palmer, T. and Darabian, N. (2017). Farmers' Club: A mobile agriculture service by
Vodafone Ghana. GSM Association, London: United Kingdom.