A decomposition analysis of microcredit welfare gaps in Ghana. A gender analysis

Abstract

The literature is replete with studies suggesting that the microcredit market is expanding with varying degrees of impact on male and female clients. The paper investigates the extent to which differences in loan use behaviour and loan amount received contribute to differences in microcredit welfare impact among male and female clients. Using the sixth (2012/2013) and seventh (2016/2017) rounds of the Ghana Living Standards Survey, and applying the Oaxaca-Blinder decomposition technique with the two-staged recentred influence functions, we find that the welfare disparity in microcredit delivery is due to a lower inequality and poverty rate among female clients relative to their male counterparts. Additionally, we find that gender welfare gaps in microcredit delivery are powered extensively by differences in the size of loans received and the loan use behaviour of clients. The findings lend support for policy reassessment on gender in the provision of credit; to improve portfolio quality and reinforce the returns of microcredit access among clients.

Keywords

• D63
• O18
• I32
• G21