Digital financial services and livelihood diversification in rural Ghana

Figures & data

Table 1. Descriptive statistics on variables used.

Description	Mean	SD	Min	Max
momo equals 1 if at least a household (HH) member has a mobile money account, otherwise zero	0.17	0.38	0	1
crop_total is the number of different types of crops HH cultivated (there were total of 42 different types of crops the HH was required to report on).	2.51	2.28	0	13
total_diverse is an entropy measure of crop diversification across 6 different groups of crops - it captures the extent of diversification across the individual crop types as well as the 6 different groups of crops	0.38	0.23	0	0.92
n_livestock is the number of different types of livestock raised by the HH (there were total of 24 different types of livestock the HH was required to report on).	1.16	1.78	0	11
livestock_div is a PCA score based on the first principal component using ownership of 14 different types of livestock.	−0.41	1.37	−2.26	6.73
own_enterp2 takes a value of 1 if the HH owns a non-farm enterprise; otherwise zero	0.33	0.47	0	1
female equals 1 if the gender of the HH head is female, otherwise zero.	0.28	0.45	0	1
age is the HH head’s age in completed years	47.41	16.34	15	99
age_squared is the squared of age	2515	1707	225	9801
married_con equals 1 if HH head is in marital or consensual relationship, otherwise zero.	0.69	0.46	0	1
Religion of HH head at three levels, measured as dummies:
no_religion	0.07	0.25	0	1
christians	0.63	0.48	0	1
other_reli	0.30	0.46	0	1
Education of HH head at four levels, measured as dummies:
no_education (HH head has no education)	0.40	0.49	0	1
primary (HH head completed primary education)	0.17	0.38	0	1
JHS_JSS_Middle (HH headed completed junior high school or equivalent)	0.30	0.46	0	1
sec_voc_plus (HH head completed at least senior high school, vocational school or equivalent)	0.08	0.26	0	1
hhsize is the number of persons who make up the HH.	4.69	3.11	1	28
any_shock equals 1 if at least a HH member above five years was ill or injured in the past 12 months, otherwise zero	0.44	0.5	0	1
el_ngrid equals 1 if HH community is connected to national power grid, otherwise zero	0.81	0.39	0	1
fin_inst equals 1 for availability of formal financial institution in HH community, otherwise zero.	0.29	0.46	0	1
pri_com equals 1 for a community with primary school, otherwise zero	0.87	0.34	0	1
JHS_com equals 1 for a community with Junior High School, otherwise zero	0.73	0.44	0	1
SHS_com equals 1 for a community with Senior High School, otherwise zero	0.30	0.46	0	1
Ecological zone where HH is located at three levels, measured as dummies:
rural_coastal	0.14	0.35	0	1
rural_forest	0.38	0.49	0	1
rural_savanna	0.47	0.5	0	1
m_penetration is mobile phone penetration rate at the community/EA	0.49	0.18	0.02	0.94
prop_mm is HH members owning phone as a proportion of all HH members	0.39	0.33	0	1
lnfarmsize is natural log of total farm size owned or operated by HH	1.25	1.01	0	9.21
lntotal_cost is natural log of the total agricultural input cost of the HH	4.11	2.93	0	9.05
ln_welfare is natural log of annual real per capita adult equivalent consumption expenditure	7.66	0.88	3.66	11.05
Dummies for 10 regions of Ghana:^2
western	0.10	0.30	0	1
central	0.09	0.28	0	1
greater_accra	0.02	0.13	0	1
volta	0.11	0.32	0	1
eastern	0.10	0.30	0	1
ashanti	0.09	0.28	0	1
brong_ahafo	0.09	0.29	0	1
northern	0.12	0.33	0	1
upper_east	0.14	0.34	0	1
upper_west	0.15	0.35	0	1

Note: ‘SD’ stands for standard deviation, and ‘min’ and ‘max’ respectively, stand for minimum and maximum.

Table 2. Estimation strategy.

Dependent variable	Variable name	Nature of dependent variable	Relevant equation	Estimation model
Access to digital finance	Momo	Dichotomous	Equation (1)(1) $${\mathit{\text{Momo}}}_i=\delta {\mathit{\text{Div}}}_i+\mathit{X\beta }+v_i$$(1)	Logit
Crop diversification	Crop_total	Count	Equation (2)(2) $${\mathit{\text{Div}}}_i=\alpha {\mathit{\text{Momo}}}_i+\mathit{X\theta }+{\epsilon }_i$$(2)	Poisson
	Total_diverse	Continuous	Equation (2)(2) $${\mathit{\text{Div}}}_i=\alpha {\mathit{\text{Momo}}}_i+\mathit{X\theta }+{\epsilon }_i$$(2)	OLS
Livestock diversification	n_livestock	Count	Equation (2)(2) $${\mathit{\text{Div}}}_i=\alpha {\mathit{\text{Momo}}}_i+\mathit{X\theta }+{\epsilon }_i$$(2)	Poison
	livestock_div	Continuous	Equation (2)(2) $${\mathit{\text{Div}}}_i=\alpha {\mathit{\text{Momo}}}_i+\mathit{X\theta }+{\epsilon }_i$$(2)	OLS
Non-farm enterprise	Own_enter2	Dichotomous	Equation (1)(1) $${\mathit{\text{Momo}}}_i=\delta {\mathit{\text{Div}}}_i+\mathit{X\beta }+v_i$$(1)	Logit

Note: Instrumental variable (IV) estimations are also performed for all dependent variables (see Section 3.2.1 for details).

Figure 1. Distribution of dependent variables and mobile money (momo).

Source: From authors’ analysis of data.

Figure 2. Variation in dependent variables by mobile money and gender of household head.

Note: ‘Av.’ stands for ‘average’. Source: From authors’ analysis of data.

Table 3. Regression results on correlates of access to digital finance (dependent variable = momo).

Independent variables	(1)	(2)	(3)	(4)	(5)	(6)
	Full sample		Male-headed households		Female-headed households
female	0.221**	0.228**
	(0.101)	(0.101)
age	−0.062***	−0.061***	−0.080***	−0.078***	−0.034	−0.034
	(0.012)	(0.012)	(0.014)	(0.015)	(0.022)	(0.022)
age_squared	0.001***	0.001***	0.001***	0.001***	0.000	0.000
	(0.000)	(0.000)	(0.000)	(0.000)	(0.000)	(0.000)
hhsize	0.148***	0.149***	0.152***	0.153***	0.183***	0.179***
	(0.019)	(0.019)	(0.020)	(0.020)	(0.039)	(0.038)
primary	0.159	0.166	0.314**	0.305**	−0.108	−0.105
	(0.114)	(0.114)	(0.131)	(0.132)	(0.191)	(0.192)
JSS_JHS_Middle	0.286**	0.321***	0.373***	0.378***	0.209	0.230
	(0.115)	(0.115)	(0.141)	(0.137)	(0.188)	(0.187)
sec_voc_plus	0.426***	0.472***	0.456***	0.476***	0.559*	0.601*
	(0.146)	(0.149)	(0.165)	(0.164)	(0.322)	(0.329)
married_con	0.117	0.098	0.224*	0.208*	0.129	0.111
	(0.096)	(0.096)	(0.125)	(0.124)	(0.163)	(0.164)
christians	0.090		0.063		0.127
	(0.173)		(0.186)		(0.399)
other_reli	0.025		0.107		−0.209
	(0.204)		(0.225)		(0.431)
any_shock	−0.018		−0.050		0.008
	(0.121)		(0.127)		(0.181)
el_ngrid	0.486**	0.509**	0.496**	0.546***	0.374	0.309
	(0.221)	(0.203)	(0.234)	(0.211)	(0.340)	(0.311)
fin_inst	−0.145	−0.285	−0.107	−0.268	−0.202	−0.301
	(0.263)	(0.186)	(0.268)	(0.193)	(0.335)	(0.227)
rural_forest	0.470*		0.665**		0.068
	(0.268)		(0.298)		(0.290)
rural_savannah	0.417		0.503		0.459
	(0.399)		(0.425)		(0.543)
lnfarmsize	−0.194***	−0.185***	−0.186**	−0.170**	−0.198	−0.204*
	(0.070)	(0.071)	(0.075)	(0.075)	(0.125)	(0.124)
lntotal_cost	0.114***	0.120***	0.108***	0.114***	0.099**	0.102**
	(0.027)	(0.027)	(0.030)	(0.030)	(0.042)	(0.041)
pri_com	0.003		−0.006		0.180
	(0.276)		(0.284)		(0.410)
JHS_com	0.108		0.201		−0.272
	(0.257)		(0.272)		(0.288)
SHS_com	−0.264		−0.315		−0.130
	(0.255)		(0.258)		(0.332)
m_penetration	1.120*	1.062*	1.208*	1.162*	0.860	0.768
	(0.583)	(0.573)	(0.634)	(0.623)	(0.688)	(0.683)
prop_mm	1.913***	1.892***	1.907***	1.883***	1.990***	2.003***
	(0.135)	(0.135)	(0.163)	(0.164)	(0.223)	(0.223)
own_enterp2	0.348***	0.347***	0.282***	0.276***	0.447***	0.461***
	(0.086)	(0.086)	(0.092)	(0.093)	(0.147)	(0.147)
crop_total	0.015	0.016	0.017	0.016	0.024	0.031
	(0.029)	(0.029)	(0.030)	(0.030)	(0.050)	(0.050)
n_livestock	0.013	0.011	0.012	0.006	0.100	0.111
	(0.029)	(0.029)	(0.030)	(0.031)	(0.073)	(0.072)
ln_welfare	−0.002	0.005	0.110	0.123	−0.238*	−0.257*
	(0.081)	(0.081)	(0.084)	(0.085)	(0.132)	(0.132)
Constant	−4.738***	−4.361***	−5.546***	−5.084***	−3.018**	−2.661**
	(0.881)	(0.806)	(0.915)	(0.844)	(1.356)	(1.319)
Regional fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
Observations	7899	7899	5676	5676	2223	2223
Pseudo R-square	0.184	0.181	0.191	0.185	0.196	0.192
Log likelihood ratio	−2972	−2983	−2154	−2168	−789.3	−792.3
Chi_square statistic	554.9	545.7	445.5	446.3	288.0	271.0
p Value	0	0	0	0	0	0

Note: (1) Robust (clustered) standard errors are in parentheses and (2) ***p < .01, **p < .05, *p < .1.

Table 4. Regression results on correlates of livelihood diversification in rural Ghana.

Independent variables	(1)	(2)	(3)	(4)	(5)
	Crop diversification		Livestock diversification		Ownership of non-farm enterprise
	crop_total	total_diverse	n_livestock	livestock_div
momo	−0.020	−0.004	0.010	0.080	0.359***
	(0.033)	(0.011)	(0.046)	(0.058)	(0.083)
female	0.001	−0.001	−0.269***	−0.205***	0.535***
	(0.031)	(0.010)	(0.057)	(0.053)	(0.076)
age	0.009***	0.000	0.009*	−0.014*	0.053***
	(0.003)	(0.001)	(0.006)	(0.008)	(0.011)
age_squared	−0.000**	−0.000	−0.000	0.000**	−0.001***
	(0.000)	(0.000)	(0.000)	(0.000)	(0.000)
hhsize	−0.004	0.002	0.046***	0.101***	0.140***
	(0.005)	(0.002)	(0.005)	(0.011)	(0.014)
primary	0.029	0.002	0.024	0.013	0.439***
	(0.027)	(0.009)	(0.042)	(0.053)	(0.085)
JSS_JHS_Middle	−0.038	−0.019*	−0.077	−0.079	0.547***
	(0.030)	(0.010)	(0.051)	(0.058)	(0.082)
sec_voc_plus	−0.231***	−0.037***	−0.088	−0.083	0.095
	(0.045)	(0.013)	(0.061)	(0.082)	(0.109)
married_con	0.040	0.018*	0.187***	0.053	0.509***
	(0.028)	(0.009)	(0.052)	(0.050)	(0.074)
christians	0.025	−0.000	0.075	0.033	0.324***
	(0.047)	(0.014)	(0.089)	(0.083)	(0.117)
other_reli	−0.045	−0.013	−0.022	0.003	0.137
	(0.056)	(0.016)	(0.096)	(0.090)	(0.129)
any_shock	0.181***	0.036***	0.175***	−0.040	0.207***
	(0.039)	(0.010)	(0.051)	(0.054)	(0.077)
el_ngrid	0.029	−0.031	0.091	0.070	0.231*
	(0.066)	(0.020)	(0.080)	(0.092)	(0.130)
fin_inst	−0.186***	−0.009	−0.081	−0.023	0.078
	(0.065)	(0.019)	(0.093)	(0.092)	(0.117)
rural_forest	0.125*	−0.032	0.206	−0.011	−0.240*
	(0.070)	(0.026)	(0.127)	(0.072)	(0.134)
rural_savannah	0.248***	0.024	0.181	−0.001	−0.279
	(0.094)	(0.036)	(0.149)	(0.109)	(0.212)
lnfarmsize	0.196***	0.047***	0.117***	0.157***	−0.225***
	(0.029)	(0.006)	(0.030)	(0.033)	(0.061)
lntotal_cost	0.156***	0.013***	0.154***	0.040***	0.001
	(0.011)	(0.002)	(0.013)	(0.012)	(0.017)
pri_com	−0.135*	−0.007	0.086	0.163	−0.187
	(0.079)	(0.026)	(0.102)	(0.111)	(0.161)
JHS_com	−0.006	−0.000	−0.238***	−0.320***	0.389***
	(0.065)	(0.021)	(0.089)	(0.101)	(0.135)
SHS_com	0.051	0.012	0.004	−0.053	−0.175
	(0.061)	(0.019)	(0.091)	(0.093)	(0.112)
ln_welfare	−0.099***	−0.008	−0.006	0.172***	0.354***
	(0.027)	(0.008)	(0.032)	(0.042)	(0.056)
own_enterp2	−0.022	−0.002	0.153***	0.129***
	(0.028)	(0.008)	(0.036)	(0.044)
n_livestock	0.012	0.000			0.094***
	(0.008)	(0.003)			(0.022)
crop_total			0.041***	0.029**	−0.015
			(0.012)	(0.014)	(0.024)
Constant	0.344	0.300***	−2.776***	−3.420***	−6.412***
	(0.249)	(0.076)	(0.360)	(0.378)	(0.583)
Regional fixed effect	Yes	Yes	Yes	Yes	Yes
Observations	7899	5439	7899	3346	7899
(Pseudo) R-squared		0.148		0.398	0.106
Log likelihood ratio	−14,504	690.2	−10,390	−4962	−4500
Chi-square statistics	1428		2134		581.1
p Value	0		0		0
F statistics		12.56		23.20

Note: (1) Robust (clustered) standard errors are in parentheses and (2) ***p < .01, **p < .05, *p < .1.

Table 5. IV_LIML regression results on effect of mobile money on livelihood diversification.

Independent variables	(1)	(2)	(3)	(4)	(5)
	Crop diversification		Livestock diversification		Ownership of non-farm enterprises
	crop_total	total_diverse	n_livestock	livestock_div
momo	−2.442***	−0.149***	0.883***	0.480	0.121
	(0.537)	(0.057)	(0.294)	(0.370)	(0.096)
Constant	0.400	0.270***	−2.066***	−3.276***	−0.682***
	(0.623)	(0.077)	(0.397)	(0.426)	(0.107)
Control variable and regional fixed effects	Yes	Yes	Yes	Yes	Yes
Observations	7899	5439	7899	3346	7899
R-squared	0.270	0.097	0.325	0.386	0.125
Log likelihood ratio	−16,491	532.6	−14,205	−4993	−4743
Endogeneity test:
endogeneity test stat.	25.34	6.982	8.431	1.209	0.194
p value of endogeneity test	4.80e − 07	0.00823	0.00369	0.271	0.659
Under identification test:
Kleibergen-Paap rk LM stat.	107.3	99.23	108.5	50.41	108.6
p Value for rk LM stat.	0	0	0	0	0
Weak identification test:
Kleibergen-Paap rk Wald F stat.	132.4	125.3	134.9	57.37	135.0
F statistic	53.90	10.83	27.01	22.04	24.94
p Value for F statistic	0	0	0	0	0

Note: (1) Robust (clustered) standard errors are in parentheses; (2) ***p < .01, **p < .05, *p < .1; and (3) overidentification test do not apply because of the use of a single instrument.

Table 6. Logit regression results on effect of digital finance on ownership of NFEs (sub-sample results for only rural agricultural households).

Independent variables	(1)	(2)
	Household is into either crop or livestock production	Household is into both crop and livestock production
momo	0.280***	0.411***
	(0.094)	(0.128)
Constant	−6.048***	−5.730***
	(0.653)	(0.826)
Control variables and regional fixed effects	Yes	Yes
Observations	5944	2841
Pseudo R-squared	0.102	0.0987
Number of clusters	549	432
Chi square statistics	474.9	248.0
p Value for chi square	0	0

Note: (1) Robust (clustered) standard errors are in parentheses; (2) ***p < .01, **p < .05, *p < .1; and (3) endogeneity test results from IV LIML regressions show that mobile money was not endogenous – see Table A4 in the Online Appendix.

Table 7. Heterogeneous effects of momo on livelihood diversification by gender of household head.

Type of variable	Gender of household head	IV results		OLS/logit/ Poison
		Endogeneity test result	coefficient
crop_total	Male	Endogenous	−3.218***	−0.027
	Female	Not endogenous	−0.789	−0.000
total_diverse	Male	Endogenous	−0.206***	−0.006
	Female	Not endogenous	−0.010	−0.006
n_livestock	Male	Endogenous	1.292***	−0.011
	Female	Not endogenous	0.688*	−0.011
livestock_div	Male	Not endogenous	0.648	0.084
	Female	Not endogenous	0.030	0.136
own_enterp2	Male	Not endogenous	0.034	0.296***
	Female	Not endogenous	0.364**	0.465***

Note. (1) Robust (clustered) standard errors are in parentheses; (2) ***p < .01, **p < .05, *p < 0.1; and (3) all models passed the identification tests (refer to Table A3 in the Online Appendix for detailed results).

Data availability statement

The main data underlying this study are available upon request from the Ghana Statistical Service (https://microdata.statsghana.gov.gh/index.php/catalog/97/study-description).