Distribution of Bank and Non-Bank Financial Institutions and Financial Inclusion in Ghana

Abstract

This study sought to examine the effects of the distribution of Banks and Non-bank financial institutions on Financial Inclusion in Ghana. Data from the seventh round of the Ghana Living Standard Survey (GLSS 7) sourced from Ghana Statistical Service (GSS) and another secondary data on types and location of financial institutions were collected from Bank of Ghana and other official online sources and used for the study. The final sample size analyzed for the research work is 2530. The main objectives of the study were to analyze the effects of number of bank and non-bank financial institutions in a community on financial inclusion and also the effects of increase in number of financial institutions in rural areas on financial inclusion. The study found that as the number of banks in a community increases, financial inclusion improves. Again, financial inclusion increases in rural areas as the presence of bank and non-bank financial institutions in the rural areas increases. The dominance analysis conducted also show that formal education plays a major role in the fight against financial exclusion in Ghana. This study makes a recommendation that the government through the Ministry of Finance and Economic Planning, and the Communication Ministry should make available the needed infrastructure that will support the opening of new branches of bank and non-bank financial institutions in all parts of Ghana. Moreover, it is recommended that the government of Ghana through the Bank of Ghana should encourage existing bank and non-bank financial institutions to extend their operations to underserved areas either through enactment of policies or provision of incentives.