Effect of financial inclusion on economic growth in ghana

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Date
2023
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KNUST
Abstract
Financial inclusion has emerged as an important approach and framework for economic development of a country. Even though empirical research on financial inclusion in developed countries is much more intensive than in developing countries, the demand for financial inclusion in developing countries is greater, as these countries have few individuals in the country who benefit from formal financial services. The main objective of the study was to analyze the effect of financial inclusion on economic growth in Ghana using quantitative research approach. Iii Specifically, the study sought: (1) to determine the level of financial inclusion and economic growth in Ghana; (2) to examine the effect of financial inclusion on economic growth in Ghana. The study, employed time series data from 2008 to 2021, used “ATM per thousand adults, commercial bank branches per thousand adults, bank account with commercial bank per thousand adults, deposit with commercial bank per thousand adults and inflation” – as financial inclusion and GDP growth as economic growth. The study found that, commercial bank branches per 100,000 adults (P – value, 0.004) and atms (P – value 0.001) as a financial inclusion variable have a significant effect on economic growth in Ghana. Inflation has a positive and significant (p-value=0.042) effect on GDP growth in Ghana. The results showed that financial inclusion index which is computed using the principal component analysis of the financial inclusion variables have a positive and significant effect on economic growth in Ghana. This finding have implications on theories and practices. From the perspective of practice, there is a need for the policy makers to adopt policies that ensures that atms and commercial bank branches are available to everybody, for depositors and savers to gain access to financial inclusion to increase economic development.
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A thesis submitted to the department of accounting and finance, school of business, Kwame Nkrumah university of science and technology in partial fulfilment of the requirements for the award of the degree of master of science in finance
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