Ghana has been widely regarded as an economic reform and poverty reduction success story. Using three waves of the Ghana Living Standards Survey (GLSS) covering the period from 1991 to 2005, this paper analyses the effects of Ghana’s financial liberalisation policies on poverty at the household level, taking particular note of gender differences. The expectation of liberalisation policies is that with financial deepening, a greater availability of lending will enable more households to use credit to raise their living standards through such channels as increased investment in high yielding variety production techniques including the use of fertilizers and irrigation, higher educational achievement and better health provision.
Using a variety of standard poverty analysis techniques, we examine changes in the pattern of borrowing over the three waves, and in particular, how far there has been an improvement in the absolute and relative position of the poorest households. The paper also examines whether female-headed households, which constitute a significant part of the sample, have found greater access to credit over this period. We find that there is a reduction in the incidence of poverty as we move from households with no credit to households with credit from informal and formal sectors. We find that male-headed households are the major contributor to poverty incidence while poverty incidence among female headed households has declined sharply. In distributional terms, there appears to have been an improvement in the position of middle and higher income households, but not of the poorest, with the bottom 8.5% worse off than at the beginning of the period. These results raise a number of policy questions concerning our understanding of the linkages between financial liberalisation and poverty alleviation.