Cointegration Analysis of Agricultural Growth and Financial Inclusion in Ghana

Abstract

Agriculture remains the foundation of economic growth for any economy irrespective of their level of development. Being aware of the imperative role of finance in the endogenous growth model, it is admitted that access and usage of finance is critical for the growth of the agriculture sector. Access to and usage of financial services would enable the incorporation of rural farmers into the financial system. In the light of this revelation, this paper examined Cointegration Analysis of Agricultural Growth and Financial Inclusion in Ghana. Time series data from the period of 1980-2014, Johansen Cointegration approach coupled with Fully Modified Ordinary Least Square method (FMOLS) for the estimation of long-run relationship between agriculture growth and financial inclusion in Ghana using Eviews 9 was used. The study revealed that, domestic credit to private sector as proxied for usage has an inverse relationship but significant. The paper also revealed that lending interest rate proxy for accessibility of financial services to farmers portrayed significantly positive impact on the growth of agriculture. As provision of financial services alone cannot enable rural farmers attain financial inclusion, there is an urgent need for the provision of domestic credit to the private sector as they help promote economic growth implying that the better the private sector gets, the bigger role they played in the economy. Government should ensure that lending interest rate of both financial and non-financial institutions that support agriculture sector is flexible to enable farmers to easily have access to capital for expansion.

Nexus between Financial Inclusion, Gender and Agriculture Productivity in Ghana

“…By implication, an increase in access to financial services leads to a rise in farm productivity. As argued by Agbenyo et al (2019) access to financial services such as low lending interest rates would manipulate the cost of borrowing, savings, and purchasing of farm inputs for the expansion of agriculture production hence improving agriculture productivity. The paper also observed that gender had a significant effect on agricultural productivity as more males were believed to achieve higher productivity than their female counterparts.…”

“…In contrast, only 5.9% are holders of a bank account, as recorded by Findex data. Agbenyo et al (2019) argues that developing countries such as Ghana and other African countries are confronted with a series of obstacles such as low output, restricted access to finance, poor roads, high-cost labor, and the absence of adequate risk management techniques and facilities such as agricultural insurance. However, accentuate that agriculture relics as the bedrock of growth to any economy regardless of their level of development.…”

“…For the rural community, agriculture continues being the primary source of livelihood, contributing significantly to ensuring food security and represent around 50 percent of the nation's export profit. Given this fact, Agbenyo et al (2019) posit that for a substantial development of the agriculture sector, access to finance, availability, affordability, incorporation of the rural finance into the formal and informal financial system is critical and cannot be undervalued. However, financial inclusion and agricultural productivity are significant issues in Ghana, as admitted in a 2007 report by the Ministry of Food and Agriculture, stating that low agricultural productivity has become a substantial concern in recent times.…”

Empirical impact of financial service access on farmers income in Ghana

“…According to KINGU (2019) and BOJNEC & KNIFIC (2021), increased revenue allows for investments in human capital and health, which boosts productivity and economic growth. AGBENYO et al, (2019), in their contribution to the access to finance debate, established that understanding finance's function in the endogenous growth theory portrays that the agriculture sector's growth is dependent on access to financing. Access to financial services is also an essential to rural development, according to ABRAHAM &FONTA (2018) andFERTŐ et al, (2021).…”

Structural equation modelling of perception for sustainable agriculture as climate change mitigation strategy in Ghana

“…1 Trend Analysis of Agricultural Output from 2009 to 2015 in Ghana. Source: Budget statement, 2016 (Adopted from Kwarase 2017;Agbenyo et al 2019) the economic viability of farm operations; and enhance finally the quality life of farmers and society in general.…”