Financial Literacy and Consumer Financial Well-being in Ghana: Any Nexus with Economic Stability

Abstract

Despite the daily efforts to cope with life's economic challenges, most Ghanaians are financially insecure. This has made pursuing lifelong ambitions more difficult. Given these realities, it is reasonable to believe that financial literacy and consumer financial stability will be a successful strategy for promoting economic stability. This stems from the realization that financial literacy is supportive in making informed financial decisions at both the household and macroeconomic levels. A high human development index score indicates that persons who make up the country's population are in good health. As a result, linking household decisions to broader policy outcomes becomes increasingly vital. This research aims to find a link between financial literacy and consumer financial stability as well as their relationship with macroeconomic stability. Financial literacy has a significant association with economic stability as measured by citizens' welfare. This discovery has several ramifications for financial literacy initiatives. In addition, consumer financial wellness has an insignificant positive impact on national economic stability. Nonetheless, it demonstrates how a financially sound consumer can boost aggregate demand by spending more, impacting job creation and macroeconomic growth. The Probit-Regression Model facilitated data analysis using a participant population of 960 across eight studied regions in Ghana. This study believes that national governments should take the favorable correlations between financial literacy and consumer financial stability on the one hand, and national economic stability on the other, seriously. As a result, policy efforts should consider the relationship between microeconomic actions and macroeconomic outcomes since the former is observed to influence the latter.

Financial literacy induced financial well‐being in Ghana: Does financial inclusion mediate?

“…Lastly, 209 people representing the minority agreed that they are financially stable, while 492 representing the majority disagreed. The comparison of the answers to the seven (7) items used in measuring the financial well-being of Ghanaians confirmed earlier findings that the financial well-being of Ghanaians is poor (Matey, 2021).…”

“…This suggests the need to extend our attention from the performance of an economy as a whole to the well-being of the individual in the economy. Moreso, the financial well-being of Ghanaians is still poor (Matey, 2021). Affirmatively, the international poverty rate in Ghana from 2019 to 2022 indicates an increase from 11.1% to 11.3% (Sasu, 2022).…”

“…This study was prompted by the paucity of empirical evidence in Ghana about the mediating effect of FI in the relationship between FL and FW (see Abdu & Adem, 2021; Akpene Akakpo et al, 2022; Matey, 2021). Again, in Ghana, the direct relationship between FL and FW, as well as financial inclusion and FW, was mostly conducted at the district level, regional level, and/or sometimes limited to a particular group of people (like small and medium enterprise owners or retirees) (Abdu & Adem, 2021; Adam et al, 2017; Agyei et al, 2019; Twumasi et al, 2022; Yakubu et al, 2017).…”