Does Digital Financial Technology Improve Access to Finance Among Households Experiencing Idiosyncratic Health Shocks in Ghana?

Mobile money, a digital financial technology, has been viewed as a development intervention, particularly for individuals or households with limited access to formal financial services in developing countries. However, there is a paucity of evidence on whether mobile money improves access to finance among households experiencing health shocks, particularly in Ghana. This study interrogates this issue with a focus on the effect of mobile money adoption on access to credit, health insurance, and inward remittance by households that face idiosyncratic health shocks using data from the seventh round of the nationally representative Ghana Living Standards Survey. Relying on different econometric techniques, including an instrumental variables estimator, the key results show that mobile money significantly facilitates access to credit, inward remittances, and ownership of health insurance policies among households with health shocks. While there is no gender heterogeneity in the effect on inward remittances, we find that the effect on credit and insurance pertains to male-headed households. Also, there is no locational heterogeneity in the effect on inward remittance and credit, but the effect on health insurance pertains to rural households. While these heterogeneities need policy attention, the results largely imply that improving access to mobile money can help address financial constraints faced by households in the event of an idiosyncratic health shock and may also be an important means for expanding the financial coping options of such households.