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This study aims to examine why Ghana has English legal origins (hypothesised as a legal framework that promotes financial development) but has not developed a well-functioning mortgage finance market.

The authors adopt the institutional autopsy approach developed by Milhaupt and Pistor (2008). This study is not a cross-country study but a historical examination of Ghana’s mortgage finance regulatory framework. The institutional autopsy framework considers the iterative process of change in a system and allows for context-specific system analysis.

The authors note that for a long period of about 68 years (1940-2008), some of the legal rules regulating mortgage finance were not typical of the hypothesised characteristics of the English common law tradition. These rules, including, interest rate controls, excessive entry barriers, loan default guarantee discriminations and complex foreclosure procedures, tended to inadequately protect creditors. In the context of the history of military rule and law-making, judicial discretion that could have promoted legal efficiency and strengthened contract enforcement was also limited. During this period, the legal system demonstrated a concentrated and coordinative character. New legislation in the form of the Home Mortgage Finance Act 2008 (Act 770) attempts to resolve some of these bottlenecks and improve creditor rights protection.

The study focuses solely on how the legal institution affects creditor protection and mortgage finance in Ghana.

Policy-wise, the study deepens the understanding of the channels through which the law affects the development of mortgage finance.

To the best of the authors’ knowledge, the methodology used (institutional autopsy) is novel in the context of analysing mortgage finance.

Credit market development requires appropriate credit assessment and default policies. This paper aims to examine the impact of household characteristics on mortgage default, using survey data collected from Ghanaian financial institutions.

Data were gathered using semi-structured questionnaires from customers of five universal banks in Ghana. A logistic regression was used to model the determinants of credit default propensity.

Contrary to established knowledge, the study shows that females are more likely to default on credit than their male counterparts. This is even more likely if the female is older, unmarried, divorced and financially illiterate and has lower educational attainments. These factors are associated with lower earning capacity, which increases default tendencies. The findings confirm that price instability (typified by excessive movements in inflation and exchange rates in addition to low national savings rate) are adversely linked to credit defaults. Borrower’s perception of constraints to credit access (such as collateral requirements, interest rate and loan size) influence credit default. Banks should be encouraged to invest in the financial literacy skills development of their customers to mitigate credit default tendencies.

The study is of practical value to credit officers and the development of the credit market in Ghana. A novel model is presented for assessing credit applications and developing credit default policies.

The research findings have not only expanded the frontiers of literature but also empirically examined the determinants of credit default propensity, which provides a basis for developing and improving credit default policy in the credit market.

The emergence of housing microfinance (HMF) as a response to the low-income groups’ inability to access traditional housing finance is an innovative strategy by creative Microfinance Institutions. Yet, low-income groups’ still face barriers in accessing these innovative products, particularly in Ghana. This paper aims to examine the critical demand barriers and how to develop and improve the design and delivery of HMF interventions in the low-income housing market in Ghana.

The paper achieves its aim by adopting a focus-group discussion strategy to examine the constraints to the demand for HMF among low-income groups’ in Ghana.

Nine factors constrained the design, delivery and demand for HMF – affordability issues; risk; land tenure insecurity; high interest rate; collateralization and insurance challenges; unfavourable HMF loan conditions; lack of social capital; high cost of land and building materials; and ineffective consumer protection.

Although limited to low-income groups, strategies to stimulate demand for HMF should focus on three broad problems – affordability, macroeconomic management and institutional development and government intervention.

The paper makes significant contributions to the body of knowledge, regarding understanding the low-income housing market and its financing in the context of a developing country.

The novelty of the paper is founded on the premise of the research methodology adopted to unearthed the barriers to the demand of HMF in Ghana. Future research effort should be directed at exploring the motivations behind low-income groups’ decision to demand HMF and the risk associated with the use of HMF in the context of Ghana.

Most households in Sub-Saharan African cannot afford adequate housing. Most often, their pension benefits are also meagre, usually resulting from low contribution levels and mismanagement. Coupled with low life expectancies, most would not live to enjoy the benefits of pensions, thus validating the need to utilize their hitherto deferred pension benefits for immediate housing investment and consumption.

Quantitative research methodology via the present value technique was used in valuing pension benefits to demonstrate the potential of pension schemes as savings mobilization mechanisms for long-term pension-backed housing financing in Ghana.

Policy wise, the paper provides some evidence to support proposals for the development of pension-backed housing finance systems in Ghana with lessons for Sub-Saharan Africa. The authors demonstrate that the Tier 2 defined contribution mandatory occupational pension scheme could serve the purpose of a savings mobilization mechanism for long-term housing financing. The authors observe that by increasing the Tier 2 contribution rate to 30 per cent, the majority of the sample, mainly of the middle-income class, could accumulate between US$11,000 and US$17,000 over their working life. At the same rate, between US$5,783 and US$9,550 could have been raised as savings between 2010 (when implementation began) and 2014. This could form a substantial equity contribution in a mortgage investment and or borrowed on a housing microfinance basis.

The paper contributes to the ongoing debate on the need to develop alternate savings mechanisms and collateral assets using pension assets, other than property, for mortgage financing. The proposals made are aimed at influencing policy by way of advocating for the use of latent pension equity to improve the housing conditions of members while they are alive, and also to suggest pension-backed housing financing as an alternative investment option. A comprehensive study would be required to settle issues of scalability, pricing and model design.