Loan Refusal, Household Income and Savings in Ghana: A Dominance Analysis Approach

Koomson, I., Annim, S. K., & Peprah, J. A. (2016). Loan refusal, household income and savings in Ghana: a dominance analysis approach. African Journal of Economic and Sustainable Development, 5(2), 172-191.

19 Pages Posted: 29 Aug 2019

See all articles by Isaac Koomson

Isaac Koomson

University of New England (Australia) - UNE Business School

Samuel Kobina Annim

University of Manchester

James Peprah

University of Cape Coast

Date Written: April 25, 2016

Abstract

Many loan applicants and households face the problem of loan refusal but researchers passively discuss it and do not consider discussing its intensity. This paper uses the fifth round of the Ghana Living Standards Survey data, employing the logit and Poisson regression models on loan refusal as binary and count variables respectively. The econometric analysis of 1,600 and 1,591 households for the loan refusal and intensity of loan refusal respectively shows that income and savings inversely relate to loan refusal and the intensity of loan refusal. The dominance analysis also showed that in Ghana, household savings causes loan refusal and intensity of loan refusal more than household income. We call on financial institutions to widen their coverage, in general, and more in the rural areas so as to increase the stock of loanable funds readily available to prospective applicants, with more flexibility for rural dwellers.

Keywords: loan refusal; credit rationing; discouraged borrowers; income; savings

JEL Classification: D14, D60, D80, Q12, R10

Suggested Citation

Koomson, Isaac and Annim, Samuel Kobina and Peprah, James, Loan Refusal, Household Income and Savings in Ghana: A Dominance Analysis Approach (April 25, 2016). Koomson, I., Annim, S. K., & Peprah, J. A. (2016). Loan refusal, household income and savings in Ghana: a dominance analysis approach. African Journal of Economic and Sustainable Development, 5(2), 172-191.. Available at SSRN: https://ssrn.com/abstract=3437549

Isaac Koomson (Contact Author)

University of New England (Australia) - UNE Business School ( email )

Armidale, NSW 2351
Australia

HOME PAGE: http://https://www.une.edu.au/

Samuel Kobina Annim

University of Manchester ( email )

Arthur Lewis Building
Oxford Road
Manchester, M13 9PL
United Kingdom

HOME PAGE: http://ssrn.com/author=1001830

James Peprah

University of Cape Coast ( email )

C-DAMAA
Uniersity of Cape Coast
Cape Coast, +233246385881 +233
Ghana

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