Digital Identity and Formal Credit Access in a Developing Economy: Evidence from Ghana’s Banking Sector

Digital identity systems reduce verification costs, but their contribution to credit allocation remains uncertain. This study distinguishes lending changes around Ghana’s July 2022 Ghana Card mandate from differences associated with banks’ integration timing. It combines 184 bank-year observations for 23 universal banks with verification-service agreement dates spanning April 2019 to December 2023. Fixed-effects models, event-study diagnostics, fractional-response models and cohort comparisons examine processing time, approval, repayment and non-performing loans. Year fixed effects absorb the mandate and common annual shocks, so the estimates concern agreement timing rather than the mandate’s overall effect. Across the mandate period, approval rates rose from 58.04 to 67.99 per cent and processing time fell by 39.5 per cent. However, no exposure coefficient is statistically significant, with wild-cluster bootstrap p-values of 0.64–0.90. Later-integrating banks improved alongside integrated banks. A 5.84-percentage-point repayment differential is suggestive but rests on two comparison banks and does not survive adjustment for multiple outcomes. Precision is limited because twenty banks executed agreements in 2022, and execution dates may differ from operational use. The findings caution against attributing sector-wide improvements to banks’ integration without establishing that operational verification had no effect. Policy should connect identity verification with credit histories, income information and risk assessment. Borrower-level and verification-use data are needed to assess effects on credit allocation, repayment monitoring and inclusion.