Peter Quartey

Financial sector development, savings mobilization and poverty reduction in Ghana

The paper primarily investigates the interrelationship between financial sector development and poverty reduction in Ghana. This is done using time-series data from the World Development Indicators from 1970-2001. The main findings are, first, that even though financial sector development does not Granger-cause savings mobilization in Ghana, it induces poverty reduction; and second, that savings do Granger-cause poverty reduction in Ghana. Also, the effect of financial sector development on poverty reduction is positive but insignificant. This is due to the fact that financial intermediaries in Ghana have not adequately channelled savings to the pro-poor sectors of the economy because of government deficit financing, high default rate, lack of collateral and lack of proper business proposals. Another interesting finding is that there is a long-run cointegration relationship between financial sector development and poverty reduction.

Long Run Determinants of Stock Market Development in Ghana

ABSTRACT The paper investigates how macro-economic factors affect Stock Market development in Ghana using the Johansens cointegration procedure. Quarterly data from 1991 to 2004 was used and the paper made very useful observations. First, the paper finds that gross domestic savings causes stock market development. A related finding is that real income, gross domestic savings, domestic credit to the private sector, and exchange rate predict the long run development of the Ghana Stock exchange. However, Treasury bill rates have negative impact on the long run development of the GSE. Contrary to expectation, inflation did not prove to be a significant factor in predicting the long run development of the stock market.

Foreign Aid and the Human Development Indicators in Sub-Saharan Africa

The recent literature on aid effectiveness suggests the presence of non-linear effects as well as other country-specific effects in the aid-growth relationship, which may explain the different findings in the empirical literature. We argue that even after correcting for the above, the focus must be on welfare effects of aid in recipient countries since other contemporaneous effects might be involved, that may not be captured in a traditional analysis of the aid-growth relationship. We present some new and exclusive evidence on the effect of aid on indicators of welfare in Sub-Saharan Africa, a region that is said to be the least probable to achieve the Millennium Development Goals (MDGs). Our findings suggest that aggregate bilateral aid does not show a significant effect on the human development indicators and other welfare variables. However, disaggregated aid in the form of sector specific and programme aid do show a significant effect on the HDIs. The article proposes that aid is scaled up but targeted at areas where these are most effective. Moreover, other innovative ways of aid delivery apart from the traditional project and programme assistance need to be considered.

Transnational Families Between Ghana, the Netherlands and the UK

This chapter investigates family life in the context of international migration between Ghana and Europe. Families engage in cross-border practices, such as nuclear and extended family members receiving remittances, goods, phone calls and visits from migrants abroad. Importantly, there is also evidence of reverse remittances, that is, flows from households in Ghana to their migratory contacts abroad. Transnational family forms, in which one or more members of the nuclear family are living abroad while the other members remain in the home or another country, are common. The extent to which migrants live transnationally or together with their nuclear family depends on their individual socio-economic and migration-related characteristics, but also on the destination country’s policies and structures. Furthermore, transnational families do not always reunify and when they do, they often reunify in Ghana rather than the country of destination.

Paying for education among households in Ghana: Is there any role for household resources and contextual effects?

Purpose - Using data from the sixth round of the Ghana Living Standards Survey, this paper aims to take a critical look at issues relating to the demand for education in Ghana. Design/methodology/approach - In doing this, the paper develops a model for the determinants of household’s educational expenditure using the full sample of data and an income-quintile disaggregated model of the determinants of household’s educational expenditures. The study adopts robust empirical estimation techniques to estimate the model. Findings - The paper finds that household resources importantly influence children’s educational expenditures with wealthier households spending proportionately more in educating their children than poorer households; large-sized households spend more in terms of educational expenses than small-sized households reflecting largely the quantity of education purchased, given that quality and contextual factors matters for educational investments. Strikingly, the findings show that female headship is a significant positive predictor of households’ demand for education. These findings provide valuable policy options relating to the goal of ensuring inclusive and quality education for all and promoting a lifelong learning by 2030. Originality/value - While literature on the determinants of households’ educational expenditures abound, very few of this literature focuses on sub-Saharan Africa. Consequently, this study makes an important contribution to the literature by providing evidence on the determinants of households’ educational expenditure in the context of sub-Saharan Africa.

The rich or the poor: who gains from public education spending in Ghana?

This paper examines the incidence of public education subsidies in Ghana. Since the late 1990s, Ghana’s government has increasingly recognised human capital as a cornerstone to alleviating poverty and income inequality, causing dramatic increases of government expenditures to the education sector. At the same time user fees have been introduced in higher education while basic education is being made progressively free. The question then is, whether these spending increases have been effective in reaching the poor and to what extent? What factors influence the poor’s participation in the public school system? We attempt to address these issues, employing the standard benefit incidence methods and the willingness-to-pay method using a nested multinomial logit model. The results give a clear evidence of progressivity with consistent ordering: pre- schooling and primary schooling are the most progressive, followed by secondary, and then tertiary. The poorest quintile gains 14.8% of total education benefts in 2005 compared to the richest quintile benefit of 26.3%. Own price and income elasticities are higher for private schools than public schools and for secondary than basic schools.

Examining the determinants of efficiency using a latent class stochastic frontier model

Abstract In this study, we combine the latent class stochastic frontier model with the complex time decay model to form a single-stage approach that accounts for unobserved technological differences to estimate efficiency and the determinants of efficiency. In this way, we contribute to the literature by estimating “pure” efficiency and determinants of productive units based on the class structure. An application of this proposed model is presented using data on the Ghanaian banking system. Our results show that inefficiency effects on the productive unit are specific to the class structure of the productive unit and therefore assuming a common technology for all productive units as is in the popular Battese and Coelli model used extensively in the literature may be misleading. The study therefore provides useful empirical evidence on the importance of accounting for unobserved technological differences across productive units. A policy based on the identified classes of the productive unit enables a more accurate and effectual measures to address efficiency challenges within the banking industry, thereby promoting financial sector development and economic growth.

Unmasking the contributing factors of entrepreneurial activities among men and women in Ghana

Purpose Using the 2010 Global Entrepreneurship Monitor (GEM) survey data, the purpose of this paper is to investigate the contributing factors of entrepreneurial propensity among males and females in Ghana. Design/methodology/approach Using a measure of entrepreneurial propensity that takes into account individuals who are involved in starting a new business (nascent entrepreneurs) as a dependent variable and socio-demographic characteristics, and perceptual variables as explanatory variables, the study adopts robust empirical estimation techniques to examine how these variables influence the probability of starting a new business among men and women in Ghana. Findings The probability of being a male nascent entrepreneur is significantly dependent upon a wide range of factors including demographic, economic, perceptual and contextual elements, albeit with important variations across gender. An individuals’ subjective assessment of fear of failure in starting a business and of having the requisite entrepreneurial capabilities; the age of the individual; gender of the individual; work status and contextual factors matters for entrepreneurial propensity in Ghana. However, important differences exist in the drivers of entrepreneurial propensity for males and females with females’ entrepreneurship attributed largely to conditions of necessity relative to their male counterparts. Originality/value The main value of this paper is to use the GEM survey (which is nationally representative) for Ghana to analyze the contributing factors of the entrepreneurial propensity among men and women in Ghana.

Inter-linkages between international and internal remittances and financial sector development in Ghana

The increase in volumes and circulation of internal and international remittances have become a substantial part of resource flow for economic development especially in developing countries with a significant impact on household welfare. Over the years however studies on remittances have focused almost exclusively on international remittances with attention to internal remittances only receiving minimal discussions. In contrast with the usual remittance literature, this paper adds two key aspects to the debate focusing on the linkage between internal and international remittances and how that interrelationship impact on the financial sector in Ghana. The data for the study was collected from recipients of international remittances in 2013 with 2012 as the reference year. The study showed that international remittance, even though, flows from a small number of international migrants to a relatively small number of people locally, the spread of internal remittance is wide and more frequent.

From Darkness to Light: The Effect of Electrification on Fertility in Rural Ghana

Between 1988 and 1993 there was a sharp fall in fertility in Ghana and fertility has since been falling steadily. We believe the massive rural electrification in 1992 plays a major role in falling fertility rates in Ghana. This study investigates how the rural electrification impacts fertility using the Ghana Living Standard Survey data. The sample we use consists of rural women who first married after 1992 and either have electricity in their homes or not. We identify the effect the electricity on fertility rate using exogenous variations in the access rate to electricity in various districts to account for endogeneity of having a home electrified. Results from control function estimations show that electrification contributes largely to the fall in fertility of women. Women with electricity in their homes compared to those who do not experience a decline in fertility between 1 and 3 children. These results are compared to two stage least square estimations which give qualitatively similar results, indicating our results are robust.