In the extant literature, it is unclear which welfare parameters financial inclusion can affect to improve welfare at the household level. To fill this knowledge gap, this study employs endogenous switching regression (ESR) and seemingly unrelated regressions (SUR) using data from the Ghana Living Standard Survey Rounds Five and Six to investigate the determinants of financial inclusion and the impact of financial inclusion on household consumption and poverty. The results show that financial inclusion is low in Ghana. Infrastructural variables such as motorable roads, banks, public transport and markets are key determinants of financial inclusion, underscoring the role of information and transaction costs in enabling financial inclusion. We find that financial inclusion robustly promotes welfare by boosting the consumption of various goods and services and reducing poverty. Thus, financial inclusion is a viable policy option for improving household welfare in Ghana.
Issahaku et al. (Thu,) studied this question.