TY - JOUR

T1 - Financial inclusion and energy poverty in Ghana

T2 - evidence from the informal sector

AU - Kabutey-Ongor, Matilda

AU - Amenah, Michel Adurayi

AU - Yorke, Frederick Richmond

PY - 2025/8/11

Y1 - 2025/8/11

N2 - This study investigates the relationship between financial inclusion and energy poverty in Ghana’s informal sector using data from the Ghana Living Standards Survey [GLSS7]. Applying multidimensional energy poverty measures and a range of econometric models, including logit regression, fixed effects, and instrumental variable [IV] estimation, the study identifies financial inclusion as a significant factor in reducing energy poverty. Households with access to financial services, such as bank accounts, insurance, credit, and remittances, are less likely to experience energy deprivation. The instrumental variable analysis, which uses distance to the nearest bank as an instrument for financial inclusion, confirms the robustness of this relationship. The results reveal that rural households and, larger households are more vulnerable to energy poverty, while female-headed, household headed by older individuals and more educated households are less likely to be energy-poor. Policy recommendations include expanding financial services in rural areas through mobile banking and microfinance, promoting energy-specific financial products, and enhancing financial literacy programs. Tailored interventions for women and large households, as well as targeted energy access initiatives for rural areas, are crucial for mitigating energy poverty. This study highlights the importance of integrating financial inclusion into energy poverty reduction strategies to promote sustainable development and improve the well-being of vulnerable populations in Ghana.

AB - This study investigates the relationship between financial inclusion and energy poverty in Ghana’s informal sector using data from the Ghana Living Standards Survey [GLSS7]. Applying multidimensional energy poverty measures and a range of econometric models, including logit regression, fixed effects, and instrumental variable [IV] estimation, the study identifies financial inclusion as a significant factor in reducing energy poverty. Households with access to financial services, such as bank accounts, insurance, credit, and remittances, are less likely to experience energy deprivation. The instrumental variable analysis, which uses distance to the nearest bank as an instrument for financial inclusion, confirms the robustness of this relationship. The results reveal that rural households and, larger households are more vulnerable to energy poverty, while female-headed, household headed by older individuals and more educated households are less likely to be energy-poor. Policy recommendations include expanding financial services in rural areas through mobile banking and microfinance, promoting energy-specific financial products, and enhancing financial literacy programs. Tailored interventions for women and large households, as well as targeted energy access initiatives for rural areas, are crucial for mitigating energy poverty. This study highlights the importance of integrating financial inclusion into energy poverty reduction strategies to promote sustainable development and improve the well-being of vulnerable populations in Ghana.

KW - Informal sector

KW - Financial inclusion

KW - Energy poverty

KW - Sustainable development

U2 - 10.1007/s43621-025-01689-6

DO - 10.1007/s43621-025-01689-6

M3 - Journal article

VL - 6

JO - Discover Sustainability

JF - Discover Sustainability

SN - 2662-9984

IS - 1

M1 - 791

ER -