ABSTRACT

This study aimed at finding the effect of financial access on the employment levels of firms in Ghana. It further establishes some basic factors that determine various firms’ financial access. The study used a firm-level survey of 720 firms, which was conducted by the World Bank in Ghana in 2013. Employment growth levels of firms was estimated and regressed using the Two- Stage Least Square (2sls), on several firm level characteristics including financial access. The result indicated that access to cost-effective line of credit/loan or an overdraft facility has positive and statistically significant effect on firms’ employment growth levels. \

Using firms’ age, size, location and other control level variables, the study found foreign ownership and firm size to be positively related to firms’ employment levels whilst firms’ age and location had insignificant effects on firms’ employment levels. These findings are consistent previous studies.

The probit estimation technique was further used by the study to establish some of the key factors that influences the financial accessibility of firms in Ghana. It was revealed that firms’ innovation, availability of an audited financial record as well as firms’ location, all significantly determinants of whether a firm will have access to finance or not.

In the light of this, the study therefore suggests that credit constraints should be significantly relaxed to help curb the high unemployment level, starting with the government lessening its policy rate. In addition, firms should acquire internationally recognized quality certification and take part in exporting of their products as well as allowing foreign partnerships on their shareholding structure.