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The financial inclusion agenda: Examining the role of conventional banks in deepening access to formal credit

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  • Abdul Malik Iddrisu
  • Michael Danquah

Abstract

Using a unique district-level panel dataset, 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.

Suggested Citation

  • Abdul Malik Iddrisu & Michael Danquah, 2021. "The financial inclusion agenda: Examining the role of conventional banks in deepening access to formal credit," WIDER Working Paper Series wp-2021-74, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2021-74
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    More about this item

    Keywords

    Banking; Financial inclusion; Access to credit; Ghana; Financial institutions; Formal credit; Panel;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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