Factors that influencing financial inclusion in Ethiopia
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Date
2022-11
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Addis Ababa University
Abstract
This paper examined the factors that affect financial inclusion in Ethiopia as well as the degree of financial inclusion in general and in relation to a few key attributes. To address the objectives of the study, secondary data from the World Bank's LSMS (Ethiopia Socioeconomic Survey Data, 2018/19) were used. After the raw data was cleared, the collected data was analyzed using the binary logistic regression model to assess the influence of various socioeconomic and demographic factors on having or not having a bank account, which is a proxy for financial inclusion in this study. According to the findings, respondent age, gender, whether they live in rural or urban residence, marital status, respondent awareness of formal financial institutions, savings states, poverty level, distance to the bank agent from the respondent's living area, and whether they live in the Amhara, Gambella, or Harer regions all have a significant impact on account ownership. However, account ownership is not significantly impacted by the response to shock remittance, credit availability, and education level. Based on the findings above, this study recommends that government and private financial institutions work together to address the root causes by closing the gender gap, encouraging savings, expanding the financial sector to all regions, and shortening the distance to financial institutions. In general, the government and financial institutions must work together to eradicate financial exclusion and make the financial sector more inclusive.
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Keywords
Ethiopia, financial inclusion, financial institution, socioeconomic, demographic, logit regression