Empirical impact of financial service access on farmers income in Ghana

Siaw, Anthony; Twumasi, Martinson Ankrah; Agbenyo, Wonder; Ntiamoah, Evans Brako; Amo-Ntim, Gideon; Jiang, Yuansheng

doi:10.1590/0103-8478cr20220345

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AGROBUSINESS • Cienc. Rural 53 (9) • 2023 • https://doi.org/10.1590/0103-8478cr20220345 copy

Empirical impact of financial service access on farmers income in Ghana

Impacto empírico do acesso a serviços financeiros na renda dos agricultores em Gana

Authorship SCIMAGO INSTITUTIONS RANKINGS

ABSTRACT:

The impact of access to financial services (AFS) and access to informal financial services (AIFS) on farmer income is examined in this study. After a multi-stage random sampling procedure, the study used a sample size of 478 people from two regions in Ghana. The endogenous treatment regression (ETR) model was used to account for selection bias while the unconditional quantile regression (UQR) model was used for a heterogenous analysis. The findings showed that education, financial literacy, IT access, farm size, and distance were all factors of access to financial services. Similarly, the findings revealed a positive and statistically significant link between household income and access to formal financial services. Similarly, there was a positive and significant association between access to informal financial services and household income. The findings showed that access to formal and informal financial services has different effects on household income. As a result, the effects of access to financial services on income varied by quantile. Based on the findings of the study, we developed policies to boost financial services accessibility as a means of increasing household income.

Key words:
financial service accessibility; farmers income; unconditional quantile regression model; endogenous switching regression model; Ghana

Universidade Federal de Santa Maria Universidade Federal de Santa Maria, Centro de Ciências Rurais , 97105-900 Santa Maria RS Brazil , Tel.: +55 55 3220-8698 , Fax: +55 55 3220-8695 - Santa Maria - RS - Brazil
E-mail: cienciarural@mail.ufsm.br

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[1] E-mail: yjiang@sicau.edu.cn. ^*Corresponding author

Variables	-------------------------------------------Measurement------------------------------------------
Access to financial services	1 if the respondent had access to financial services; 0 otherwise
Access to informal financial services	1 if the respondent had access to informal financial service; 0 otherwise
Farm income (GH¢)	Amount of annual farm income (GH¢1000/capita)
Off-farm income (GH¢)	Amount of annual farm income (GH¢1000/capita)
Household income (GH¢)	Amount of total household income (GH¢1000/capita)
Age	Age of the respondent
Gender	1 if respondent is a male; 0 otherwise
Education	Years of schoolings
Household size	Number of members in a household (number)
Financial Literacy	Financial literacy scores
Membership	1 if respondent joins an association; 0 otherwise
Access to IT	1 if the respondent has access to IT (Television, radio and Internet); 0 otherwise
Distance	1 if respondent had a relative with a chronic disease; 0 otherwise
Farm experience	Years of farming experience (years)
Farm size	Respondent farm size (in acres)
Eastern	1 if respondent resides in Eastern region; 0 otherwise
Brong Ahafo (BA)	1 if respondent resides in BA region; 0 otherwise
Distance	The distance from the respondent house to the nearest financial institution
Social network	1 if respondent relates to someone who can provide loan to him/her; 0 otherwise

Variables	Mean	Std. Dev.	Min	Max
Access to financial services (AFS)	0.42	0.50	0	1
Access to informal financial services (AIFS)	0.45	0.49	0	1
Farm Income	2.05	0.87	1.24	3.98
Off-farm Income	2.43	1.05	1.41	4.85
Total household Income	4.49	2.76	2.65	8.83
Age	41.72	12.20	30	64
Gender	0.70	0.46	0	1
Education	7.48	5.49	0	16
Household size	5.36	1.30	1	9
Financial Literacy	1.14	0.94	0	3
Membership	0.44	0.50	0	1
Access to IT	0.81	0.56	0	1
Farm experience	13.65	7.84	2	32
Farm size	3.34	1.87	1	11
Eastern	0.46	0.51	0	1
Brong Ahafo	0.54	0.49	0	1
Distance	1.34	0.47	0	1
Social network	0.43	0.46	0	1

Variables	Access to Financial Services (AFS)	Non- Access to Financial Services (NAFS)	---------------Diff. --------------
Farm Income	2.45 (1.04)	1.74 (0.71)	0.71^***
Off-farm Income	3.12 (1.52)	1.78 (0.58)	1.34^***
Total household Income	5.43 (2.06)	3.71 (1.17)	1.72^***
Age	41.14 (7.23)	42.45 (8.04)	1.31
Gender	0.83 (0.08)	0.54 (0.06)	0.29^***
Education	9.32 (3.21)	5.46 (2.83)	3.86^***
Household size	5.19 (3.98)	5.68 (3.04)	0.49
Financial Literacy	1.89 (0.43)	0.63 (0.32)	1.26^**
Membership	0.46 (0.06)	0.41 (0.03)	0.05
Access to IT	0.89 (0.07)	0.83 (0.05)	0.06^*
Farm experience	14.17 (0.77.)	13.24 (0.73)	0.93
Farm size	4.21 (2.32)	2.52 (1.21)	1.69
Distance	1.68 (0.75)	1.02 (0.62)	0.66^*
Social network	0.57 (0.08)	0.33 (0.05)	0.24^**

Variables	Access to Financial Services	Total Household Income	Access to Financial Services	Farm Income	Access to Financial Services	Off-farm Income
Access to formal financial Services		0.239^** (0.098)		0.269^*** (0.099)		0.454^*** (0.096)
Age	-0.004 (0.230)	-0.031 (0.333)	-0.006 (0.233)	-0.003 (0.522)	-0.008 (0.231)	-0.005 (0.820)
Gender	-0.085 (0.591)	-0.006 (0.553)	-0.088 (0.593)	-0.013 (0.244)	-0.090 (0.596)	-0.075 (0.231)
Education	0.160^*** (0.033)	0.188^* (0.088)	0.164^*** (0.035)	0.478^*** (0.059)	0.166^*** (0.036)	0.239^** (0.099)
Household size	-0.070 (0.282)	0.007 (0.183)	-0.072 (0.284)	0.014 (0.630)	-0.074 (0.286)	-0.049 (0.250)
Financial Literacy	0.451^*** (0.092)	0.290^*** (0.065)	0.455^*** (0.094)	0.237^** (0.088)	0.458^*** (0.096)	0.257^*** (0.087)
Membership	0.030 (0.173)	0.315^*** (0.023)	0.032 (0.177)	0.225^*** (0.024)	0.035 (0.175)	-0.162 (0.682)
Access to IT	0.100^* (0.040)	0.150^*** (0.066)	0.102^* (0.044)	0.127^*** (0.012)	0.106^* (0.043)	0.097^* (0.044)
Farm experience	-0.010 (0.818)	-0.000 (0.028)	-0.012 (0.820)	-0.004 (0.685)	-0.015 (0.819)	0.009 (0.408)
Farm size	0.270^*** (0.050)	0.442^*** (0.058)	0.272^*** (0.052)	-0.003 (0.933)	0.276^*** (0.053)	0.218^** (0.078)
Eastern	-0.270^*** (0.050)	0.442^*** (0.058)	-0.272^*** (0.052)	-0.003 (0.933)	-0.276^*** (0.053)	0.218^** (0.078)
Distance	-0.218^*** (0.093)		-0.220^*** (0.097)		-0.223^*** (0.095)
_cons	-2.121^** (0.648)	1.283^*** (0.244)	-2.128^** (0.644)	1.489^*** (0.689)	-2.125^** (0.648)	3.503^*** (0.985)
ρ _µε	-0.311 (0.342)		-0.273 (0.199)		-0.136 (0.95)
Wald X²	------------------89.45------------------		------------------26.11------------------		------------------38.34------------------
Log pseudo	-----------------633.615----------------		-----------------431.809----------------		-----------------444.755----------------

Variables	Access to informal financial service	Household Income	Access to informal financial service	Farm Income	Access to informal financial service	Off-farm Income
Access to informal financial Services		0.135^*** (0.048)		0.159^*** (0.056)		0.254^** (0.076)
Social network (IV)	0.076^** (0.020)		0.081^** (0.022)		0.079^** (0.020)
Control variables	Yes	Yes	Yes	Yes	Yes	Yes
Regional Dummies	Yes	Yes	Yes	Yes	Yes	Yes
Constant	-0.121^** (0.048)	0.283^*** (0.044)	-0.696 (0.159)	0.489^*** (0.089)	-0.754^*** (0.061)	0.503^*** (0.085)
ρ _µε	-0.157 (0.142)		-0.328 (0.142)		-0.185 (0.106)
Wald X²	------------------114.45-----------------		------------------76.59------------------		------------------83.35------------------
Log pseudo	-----------------1103.314---------------		-----------------984.932----------------		-----------------504.081----------------

	---------------Household Income----------------				-----------------Farm Income-----------------				--------------Off-farm Income--------------
	25th	50th	75th	90th	25th	50th	75th	90th	25th	50th	75th	90th
AFS	0.261^***	0.426^***	0.167	0.170	0.111	0.098	0.223^**	0.347^**	0.095	0.094	0.144^*	0.216
	(0.039)	(0.043)	(0.419)	(0.098)	(0.091)	(0.071)	(0.090)	(0.133)	(0.083)	(0.077)	(0.072)	(0.146)
AIFS	0.021	0.135^*	0.243	0.024	0.030	0.119	0.165^*	0.234^**	0.143^*	0.067	0.064	0.136
	(0.206)	(0.058)	(0.166)	(0.150)	(0.099)	(0.077)	(0.089)	(0.105)	(0.062)	(0.086)	(0.083)	(0.163)
Age	0.005	0.116^**	0.015	0.136^*	(0.005)	-0.002	-0.001	0.005	0.004	0.001	0.010	0.014
	(0.498)	(0.048)	(0.252)	(0.072)	(0.008)	(0.007)	(0.007)	(0.010)	(0.008)	(0.007)	(0.007)	(0.014)
Gender	-0.099	0.085	0.102	0.113	-0.022	0.070	0.007	0.014	0.155^*	0.014	-0.021	-0.095
	(-0.976)	(-0.0.498)	(0.262)	(-0.708)	(0.081)	(0.063)	(0.072)	(0.094)	(0.074)	(0.069)	(0.067)	(0.130)
Education	0.024	0.058	0.068	0.195^***	0.025	0.045	0.084^*	0.133^**	0.003	0.006	0.027	0.049
	(0.388)	(0.231)	(0.928)	(0.015)	(0.050)	(0.039)	(0.045)	(0.049)	(0.045)	(0.044)	(0.042)	(0.083)
Household	-0.022	-0.029	-0.007	-0.039	(-0.013)	-0.012	0.012	0.027	-0.059^*	-0.045^*	-0.057^*	-0.099^*
size	(0.629)	(0.083)	(0.173)	(0.694)	(0.029)	(0.023)	(0.026)	(0.034)	(0.027)	(0.025)	(0.024)	(0.048)
Financial	0.085	0.043	0.208	0.289^**	0.004	0.032	0.038	0.151	0.125	0.021	0.008	0.105
literacy	(0.730)	(0.493)	(0.494)	(0.116)	(0.093)	(0.073)	(0.083)	(0.108)	(0.086)	(0.080)	(0.078)	(0.152)
Farm	0.334^**	0.208^***	0.169	0.012	0.183^*	0.166^**	0.151^*	0.220^*	-0.020	-0.069	-0.175	-0.054
membership	(0.230)	(0.043)	(0.417)	(0.078)	(0.084)	(0.066)	(0.076)	(0.098)	(0.088)	(0.073)	(0.099)	(0.135)
Access to IT	0.371^***	0.245^*	0.031	0.064	(0.015)	0.015	0.096	0.150	0.257^**	0.254^***	0.234^**	0.129
	(0.097)	(0.123)	(0.226)	(0.361)	(0.092)	(0.072)	(0.083)	(0.107)	(0.064)	(0.079)	(0.087)	(0.150)
Farm	-0.006	-0.010	-0.091^*	-0.021	(-0.003)	0.001	0.001	-0.006	0.001	0.012^*	0.003	0.010
Experience	(0.637)	(0.435)	(0.043)	(0.417)	(0.008)	(0.006)	(0.007)	(0.009)	(0.007)	(0.006)	(0.006)	(0.013)
Farm size	0.013^*	0.143^***	0.131^***	0.259^***	0.011	0.114^*	0.142^**	0.010	-0.006	0.023	0.013	0.024
	(0.007)	(0.020)	(0.017)	(0.090)	(0.076)	(0.054)	(0.055)	(0.056)	(0.005)	(0.045)	(0.016)	(0.019)
Constant	3.524^***	4.510^***	4.723^***	3.890^***	2.899^***	4.260^**	2.840^**	2.229^**	4.579^**	4.618^**	4.735^*	4.209^**
	(0.975)	(2.367)	(1.565)	(0.470)	(0.586)	(1.659)	(1.096)	(0.881)	(1.791)	(1.688)	(1.896)	(1.547)