Financial literacy, financial information, and financial well-being: evidence from Ghana rural households.

Abstract

Background: Financial information is expected to enhance financial literacy, financial decision-making, and household well-being. However, in Ghana’s Upper West Region (UWR), several challenges—including low financial literacy, high poverty levels, sociocultural influences, and the marginalization of women in financial matters—may cause households to disregard financial information when addressing pressing sociocultural concerns. Additionally, the growing exposure of rural populations to digitalization and financial literacy programs raises questions about how different types of financial information influence the relationship between financial literacy and financial well-being. This thesis deeply explores this issue, considering this context's enabling and limiting factors. Objectives: The thesis provides a detailed analysis of how various types of information influence the relationship between financial literacy and financial well-being in this context. It starts by 1) examining how financial literacy influences financial well-being as a preliminary inquiry and 2) investigating the role of crude financial information in shaping financial decisions. These analyses are followed by an assessment of how 3) the levels, 4) patterns, and 5) sources of financial information mediate this relationship. Finally, the thesis evaluates 6) whether the findings vary when male dominance is moderated, ensuring that both men and women have an equal voice in responding to the questions in this thesis. Methods: A mixed-methods approach was employed, integrating quantitative and qualitative analyses to address the research objectives. The quantitative component focused on Objectives 1 to 5, while the qualitative component provided more profound insights into Objective 6. For the quantitative analysis, cross-sectional data were collected through a survey of 663 randomly selected household heads in the UWR. A hierarchical reflective-reflective measurement model within Structural Equation Modeling–Partial Least Squares (SEM-PLS) was used to examine the mediating role of financial information. For the qualitative analysis, 12 household heads—equally represented by gender (six maleheaded and six female-headed households)—were interviewed. Content analysis was used to analyze qualitative data, allowing for a richer understanding of financial decisionmaking behaviours and gender dynamics. Findings: From the quantitative analysis, the study revealed that financial literacy 1) positively influences financial well-being, with a more significant effect on men than women, but with a similar impact regardless of formal education status, 2) has a significant positive impact on various dimensions of financial information, including consumption, level, pattern, and source. Additionally, the study found that the extent of financial information consumption, the advanced status of financial information received, and recent patterns of financial information-seeking mediate(enhance) the effect of financial literacy on financial well-being in rural households in the UWR. These results are robust across genders, financial products, and formal education status. However, financial information sources did not strengthen the impact of financial literacy on financial well-being in the region. From the qualitative analyses, the study reveals that financial literacy influences financial well-being, regardless of gender. Women tend to make non-financially sound decisions in specific sociocultural contexts involving burials and weddings. Both men and women with similar financial literacy levels tend to make similar decisions on resource management efficiency, risk-taking, and investment. Policy implications: The findings highlight financial information's crucial role in enhancing financial literacy programs' effectiveness regardless of sociocultural context barriers. Reliable access to such information empowers women and promotes inclusive development. Policymakers should prioritize ensuring accessible, credible financial information for rural populations to support financial well-being. Contribution to knowledge: This study contributes to financial literacy research by examining how financial information influences the link between financial literacy and financial well-being in rural Ghana, where sociocultural norms hinder rational financial decisions. It is the first to provide a detailed mixed-methods approach to distinguish the mediating role of financial information in studied relationships across gender, financial products, and educational status in a context where sociocultural context entails financial commitments likely to obstruct personally beneficial financial decision-making. Other conttibution to knowledge are detailed in the thesis.