Private sector employees are less likely to demand loan than their public sector counterparts.

A research led by Samuel Tawiah Baidoo, a PhD Candidate at the Department of Economics, Kwame Nkrumah University of Science and Technology, has revealed.

It says, being a private sector employee decreases the likelihood of demanding loan.

The researchers attribute this outcome to the reluctance of financial institutions to give out loans to people without regular income.

“Most formal financial institutions in Ghana do not approve and disburse loans to individuals perceived not to have regular income in order not to increase their risk of non-performing loans,” the report stated.

The research which sought to investigate whether people’s socio-demographic and economic characteristics matter in loan demand used 700 respondents from the Kwahu West Municipality in the Eastern region for the analysis.

The findings published in the Journal of Science and Technology also found that, individuals who have obtained tertiary education as well as financially literate individuals are more likely to demand loan.

The competency level of tertiary education level were fingered in this finding.

“Individuals who have attained tertiary education are more skilled and have investment and productive ambitions which influence them to demand loan,” the report explained.

Income level also influenced people’s willingness to go for loans. The research showed that as income level rises, the likelihood of demanding loan also increases.

The research however showed that gender and household size were not influential in loan demand.

Individuals who are married, divorced and those in active labour force (18 to 60 years) also had higher likelihood of demanding loan.

Based on the findings, the researchers suggested that “policies to deepen financial inclusion through loan demand should be incorporated into the broad policy package aimed at improving welfare of Ghanaians.”