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Access to Finance and Barriers to Financial inclusion in Ethiopia


In Ethiopia 78% of adults or 31 million people do not have a formal account. In this study both the supply and demand factors are analyzed to understand the access and barriers financial inclusion in Ethiopia. Thanks to the Ethiopian government and World Bank for their interest in collecting a very rich data set called ESS which includes financial inclusion from demand side for 2015/16 ESS. This study unusually attempts to combine both the supply and demand side analysis to understand access and barriers to financial inclusion in Ethiopia. From the supply side, Ethiopia has been far from the SSA and EAC in performance regarding access to finance. However data show that Ethiopia has a huge untapped potential in mobile and agent banking. Both the descriptive and probit estimation informs that many socioeconomic factors are associated with reason for not having a formal account among Ethiopian adults. In line with other researchers such as(Demirgüç-Kunt and Levine 2008; Fungáčová and Weill 2015; Zins and Weill 2016)and (Demirgüç-Kunt et al. 2015)our result shows financial capability (income) and education are the most important factor. According to our analysis, both voluntary and involuntary exclusion are the most important barriers in Ethiopia. They are influenced by two types of factors: (1) variables that denote individual vulnerability such as financial capability, gender, age and both financial and general education level: (2) geographic variables such as living in rural areas and different regions, being worried about unexpected expenses (shocks) and religion.

Corporate Author: 
Ethiopian Economics Association (EEA)
Ethiopian Economics Association (EEA)
Primary Descriptors: 

Financial Inclusion

Secondary Descriptor: 

Barriers;  Access to Finance

Geographic Descriptors: 
Cataloge Date: 
Broad Subject heading: 
Call Number: 
Serial Key Title: 
Proceedings of the Fifteenth International Conference on the Ethiopian Economy
Publication catagory: 
Content type: 
Publication date: 
2018-06-01 00:00:00
Conference Place: 
EEA Multi-purpose Building Conference Hall, Addis Ababa
Place of publication: 
Addis Ababa
Type of material: 
Current frequency: 
Thematic area: 
Microeconomics, Industry and Social Sector Related
Conference date: 
July 20 – 22, 2017