The Effects of Access to Credit on Household Nutritional Outcomes in Ghana

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Issahaku, Haruna
Abu, Benjamin Musah
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This study measures the effects of credit on anthropometric measures of children and women in Ghana's Savannah Accelerated Development Authority (SADA) zone. The study argues that children’s anthropometric measures share some relationship and thus need to be modelled as a system. Therefore, we employ the three-stage system of simultaneous equations (reg3) to deal with the structural system and endogeneity of credit in the children’s model, and an extended probit with binary endogenous covariate (eprobit) in the women’s model. In addition, we test the pathways of credit to nutrition using data from the USAID Ghana Feed the Future (FTF) baseline survey. The results show that credit has a simultaneously strong positive effect on nutritional outcomes of children and reduces the probability of a woman being underweight. Further, crop yield, market participation, income from crop sales, and non-farm business ownership are the key channels through which credit influences nutrition. Through relevant the institutions, the government should establish a full-blown farm credit policy to provide credit to farm households.