Financial Inclusion and Profitability of Businesses: Case

Study of Traders in Ho Municipality, Volta Region by

Joyce Aku Kwamitsey
Abstract

This thesis was set out to identify the various benefits derived from financial inclusion
on businesses.

The aim of this work is to identify the level of financial inclusion among traders in the
Ho Municipality as well as relationship between financial inclusion and profitability in
relation to expansion, capital and profit from these businesses. Probit method and
linear regression methods were used to analyze
Problem Statement

• There are disparities in terms of growth and development across various income groups and businesses

• Access and use of financial products and services can bridge some of these gaps however, there are barriers in
acquiring these products.

• With the springing up of small businesses, the rate of financial inclusiveness is expected to increase thus the need
to evaluate how much financial inclusion influence these businesses.

Objective of the Study

• The objective of the study is to determine the impact of financial inclusion on businesses of traders. The work aims:

• To identify quality, use and access of financial inclusion among traders.

• To examine how the relationship between financial inclusion and profitability affect expansion, profit and capital of
businesses.

• To find challenges faced in accessing financial services and products.

Definition and Concept

The World Bank explained financial inclusion as businesses or individuals gaining access reasonable as well as valuable
products and services from financial institutions which meet requirements in areas of payments, credit, savings,
insurance and transactions– distributed in an accountable and maintainable system

The main indicators in measuring financial inclusion are access, use and quality.

Profitability is one main concept of measures used to quantify financial access and use

Theoretical Reviews

Threshold decision making theory: it is observed that when individuals are faced with the decision to either be
financially included or not, the decision of these individuals is based on certain factors and parameters that complement
such decision

Theory of change: Participants can afford and use financial products and services at different stages in their lives which
reduces shock and stress that are experienced in the economy
Targeted Population and Sample Frame

Clients who own accounts with the Amuga Rural Bank in the Volta Region in the Ho Municipality: who have opened

accounts and are able to apply for some financial products and services offered. The sample frame include individuals
above 18 years and above who are engaged in any productive business and own an account with the rural bank.

Sample technique and Sample size

Convenience and purposive sampling techniques were used to select the sample size from the targeted population. A
sample size of 90 was arrived at using the Cochran’s formulae.

Data Collection Instrument

Questionnaire administered covered areas like the use of financial products and services, the ease of access to credit as
well as the relationship between financial inclusion and profitability of businesses of traders.

Data Analysis

Data collected on the field for this study was analyzed using the Stata software
ANALYSIS
Financial products and services have positive effect on financial inclusion since the use, access and quality are
statistically significant.

Results from the table clearly indicated that there is a statistically significant variation in the use, access and
quality of products and services provided by the financial institution as well as duration of the business in terms
of expansion.

Results also indicated that there was statistically significant difference in gender, business sector, frequency of
use of account and challenges faced in accessing products in terms of profit

Results again indicated statistically significant difference in the gender, duration of business and challenges
faced in accessing products in terms of capital

Traders will need better explanations of the operations of financial institutions in order to derive better
satisfaction from the products and services on offer as well as more outlets since they are the challenges that
traders experience most.
Conclusion

It is evident that traders in the Ho Municipality are financially included through the ownership of accounts:
mostly through the use of bank branches which are more accessible than other facilities and caters for their
specific expectations of the products and services offered. Traders also divulged that they have experienced
some level of expansion in their business but not as much as access to capital to boost their businesses and profit
made by utilizing these financial products and services. The top two challenges that traders face was inadequate
financial institution outlets and complicated bank operations.
Recommendation

It is recommended that financial institutions should restructure their activities in order to accommodate more
customers and ensure that their facilities are spread across at strategic locations and in good working conditions
so as not to increase the time it takes for customers to have access to services they provide

This can be done through financial education programs organized for owners of businesses so that they will be
abreast with current or new developed products and services.