Abstract:
The increased spending of household on occasions has become both social and
economic issue today and it is being discussed by many scholars. Financial
deepening has made it easier and possible for household to have access to
credit to spend on needs of household that on the other way wouldn’t have
been possible. This study sought to estimate the effect of the amount of credit
on social spending and also to estimate the effect of social spending on
households’ health expenditure in Ghana using the sixth round of Ghana
Living Standard Survey data (GLSS 6). The study employed Ordinary Least
Square estimation. It was found that an amount of credit has positive and
significant effect on social spending in Ghana. That is, household perceive
social spending as investment hence an increase in amount of credit extended
to the household has the tendency of increasing household spending on
funerals, weddings and parties. It was also found that spending on social
occasions results in an increase in household’s health expenditure. It is
recommended that Household heads should pay crucial attention to the cost on
credit (interest rates) as the amount of loan granted to them has the cost burden
imbedded in it. That’s, despite the fact that social spending not depriving
household from health needs, the high cost on loans wouldn’t allow the
household head from retrieving the entire principal amount and the interest
within the time frame within which the spending is done.
