Financial Inclusion, Governance and Social Welfare in Ghana

Abstract

The evolution of Social welfare after the world’s economic downfall in 2008 has been documented to contribute significantly to reduction in poverty and inequality of all forms, through good governance and financial inclusion, which enables all individuals to partake in economic activities by gaining access to finance. Hence understanding the nexus among financial inclusion, governance and social welfare will enable decision makers formulate policies and programme that will alleviate social welfare challenges in Ghana. The study sought to: find the effect of financial inclusion on social welfare; the effect of governance on social welfare and finally, examine how governance moderates the effect of financial inclusion on household’s social welfare in Ghana. The main data source for the study was the most recent Ghana Living Standard Survey data (GLSS 7) compiled by the Ghana Statistical Service between 2016 and 2017. Ordinary Least Squares (OLS) and Two Stage Least Squares (2SLS) techniques were adopted as the estimation techniques for the study. The result of the study revealed that both financial inclusion and governance had positive significant effects on household’s social welfare in Ghana. In the context of how governance moderates the effect of financial inclusion on household’s social welfare in Ghana; the results were insignificant. The study concludes that getting more households financially included serves as a catalyst for empowering many households to improve their social welfare level. Also, implementation of more social welfare programs by good governance would help improve household’s social welfare level in Ghana.