ABSTRACT

In spite of plethora of evidence endorsing the significance of financial sector development which includes capital markets and the banking sector in the less advanced countries, usage of financial services is skewed towards the rich individuals and those who are already better off, neglecting the poor and those who are in the remote areas. Using the Ghana Living Standard Survey Round Six (6) data, focused on four main research objectives. Employing the probit model, the study revealed that religious affiliation, educational level, age, marital status, sex and hours worked significantly influence the likelihood of owning bank account in Ghana. The study revealed that majority of the respondents that were excluded from the banking sector were as a result of poverty or financial difficulties and less than 2 percent are involuntarily excluded from formal banking services.

The findings again showed that majority of the respondents applied for loans for business, followed by consumption, education and agricultural activities. Lastly, majority of the respondents were refused loans because they were unable to provide collateral security, followed by inability to get a guarantor, low salary and inappropriate purpose of loans. The researcher suggests that policy architects should draft or model strategies that will ensure competition in the banking sector. Also, roads and communication infrastructure should be developed in order for banks to penetrate the rural areas. Banks should also strengthen e-banking or encourage strategic partnership with telecommunication networks to help minimize the distance barrier.