Re-Imaging Literacy as a Driver for Financial Inclusion in Ethiopia
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Date
2025-09-02
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AAU
Abstract
:: This study analyzes the multifaceted role of digital financial literacy
(DFL) and financial literacy (FL) in advancing holistic financial inclusion within Ethiopia’s diverse socioeconomic heterogeneity. Drawing on nationally representative data from the Ethiopia socioeconomic survey (ESS), the research employs robust mixed-effects economic modeling to investigate how DFL and FL influence three interconnected areas of financial inclusion: interest-free banking (IFB), traditional financial services, and digital financial inclusion through mobile banking. The finding reveals that both DFL and
FL are critical, statistically significant predictors of financial inclusion, with DFL exerting the strongest influences on the usage of IFB and digital financial services. The data insight analysis uncovers pronounced disparities in literacy and inclusion by region, gender, income, and religion, with rural, female, and low-income groups facing persistent barriers. Remarkably, the research demonstrates that enhancing DFL and FL not only increases the likelihood of adults using IFB and conventional financial services but also helps bridge the digital divide, particularly in mobile banking uptake. The study
emphasizes the necessity of context-sensitive, dual-literacy interventions and the leveraging of community networks such as Equb and Idir to foster resilience and inclusion. Policy recommendations include the need for targeted literacy training and curriculum redesign, digital infrastructure expansion, and the tailoring of financial products to local values and needs with grassroots community-empowering economic systems. By integrating advanced econometrics techniques and focusing on Ethiopia’s socioeconomic disparities context, this deep data-driven research offers practical ecommendations to policymakers and practitioners seeking to solve financial exclusion and achieve realized true, robust, multidimensional inclusion. The dissertation synthesis concludes that closing Ethiopia’s financial inclusion gaps requires a holistic, strategic, innovative approach that combines literacy, technology, and adaptive policy, ensuring social justice and equitable access and usage for all segments of society. Keywords: Digital Financial Literacy, Financial Inclusion, Interest-Free Banking, Mobile Banking, Socioeconomic Disparity, Ethiopia