Financial Inclusion and Energy Poverty: Empirical Evidence from Ghana

Energy Economics, Forthcoming

28 Pages Posted: 25 Jan 2021

See all articles by Isaac Koomson

Isaac Koomson

University of New England (Australia) - UNE Business School

Michael Danquah

United Nations - United Nations University (UNU)

Date Written: December 9, 2020

Abstract

With myriads of policy options being considered to alleviate energy poverty, the financial inclusion-energy poverty nexus has received little attention despite its potential. Using two rounds of living standards survey data from Ghana, this study examines the effect of financial inclusion on energy poverty using multidimensional measures. Endogeneity associated with financial inclusion is instrumented using distance to the nearest bank. We found that the share of energy poor households in Ghana reduced slightly from about 81% to 80% between 2012/13 and 2016/17. Our estimates show that a standard deviation increase in financial inclusion is associated with a decrease in household energy poverty between 1.380 and 1.556 standard deviations. This outcome is consistent across different quasi-experimental methods. The results show more consistency for rural and male-headed households. Improvement in financial inclusion is likely to result in the biggest reduction in energy poverty for those in the employee category. We identify consumption poverty and household net income as potential channels through which financial inclusion influences energy poverty.

Keywords: energy poverty, financial inclusion; consumption poverty, education, household income

JEL Classification: D03, D12, D14, I32, Q41

Suggested Citation

Koomson, Isaac and Danquah, Michael, Financial Inclusion and Energy Poverty: Empirical Evidence from Ghana (December 9, 2020). Energy Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3759480 or http://dx.doi.org/10.2139/ssrn.3759480

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/

Michael Danquah

United Nations - United Nations University (UNU) ( email )

Tokyo, 150-8925
Japan

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