The analysis of financial inclusion and its determinants in the rural area of south Wollo zone, Amhara Region, Ethiopia

Figures & data

Table 1. Sample size distribution between target kebeles¹

Zone	Districts	Kebeles	HHs^2	Sample		Percentage
South Wollo	Dessie Zuria	Tabasit	628	56		15.23
		Gerado	902	80		21.87
	Tehuledere	Hara	892	79		21.63
		Mitiro	879	78		21.31
		Korke	823	73		19.96
	Total		4124	365		100.00

Source: Own computation from Central Statistical Agency (2021)

Table 2. Measurement and description of variables

Variables	Definitions and their measurement	Expected signs
Financial inclusion	Dependent variable, and = I if respondents are financial included and = 0 no
Age (AGH)	Continuous variable, measured in year	Positive
Religious Oriented financial service(ROFS)	Dummy variable is and = 1 if yes, = 0, no.	Positive
Education level(EDUL)	Categorical variable and = 1 if illiterate, = 2 if primary school completed, = 3 secondary school and above completed	Positive
Documentation challenge (DOC)	Dummy variable and = 1 if yes, = 0 no.	Positive
Affordability of financial service (AFS)	Dummy variable and = 1 if yes, = 0 no.	Positive
Financial capability(FCA)	Dummy variable and = 1 if yes, = 0 no.	Positive
Trust in traditional financial association (ToTFA)	Dummy variable and = 1 if yes, = 0 no.	Negative
Connectivity of respondents to the urban society (CNU)	Dummy variable and = 1 if yes, = 0 no.	Positive
Trust in a formal financial institution(ToFFI)	Dummy variable and = 1 if yes, = 0 no.	Positive
Distance from Financial institution (DSFI)	The continuous variable was measured in kilometers (Km).	Positive

Table 3. Financially included and excluded respondents

Financial inclusion, if the respondent, has a saving account, credit, or bank account.	Freq.		Percent
	No	287	79.28
	Yes	75	20.72

Sources: own survey computation (2022)

Table 4. Percentage distribution of financial inclusion attributes

Variables		Freq.	Percent
Religious-oriented services(ROFS)	Yes	82	22.65
	No	280	77.35
Education level (EDUL)	Illiterate	164	45.30
	Primary	162	44.75
	Secondary	36	9.94
Documentation challenge (DOC)	Yes	34	9.39
	No	328	90.61
Affordability of financial institution service(AFS)	Yes	62	17.13
	No	300	82.87
Financial capability(FCA)	Yes	132	36.46
	No	230	63.54
Trust in traditional financial association(ToTFA)	Yes	305	84.25
	No	57	15.74
Connectivity of respondents to the urban society(CTU)	No	244	67.40
	Yes	118	32.60
Trust of respondents for formal financial institutions(ToFFI)	Yes	61	16.85
	No	301	83.15

Sources: own survey computation (2022)

Table 5. Summary statics of continuous variables on the determinants of financial inclusion

Variable	Obs	Mean	Std. Dev.	Min	Max
Distance from financial institutions (DSFI)	362	7.47	8.94	1	50
Age (AGH)	362	42.47	11.3	18	75

Sources: own survey computation (2022)

Figure 1. Reasons rural households motivated to use formal financial institutions.

Sources: own survey computation (2022)

Figure 2. Source of loans in the rural area.

Sources: own survey computation (2022)

Table 6. Summary of diagnostic tests

Multicollinearity	Heteroscedasticity	goodness-of-fit test(Hosmer-Lemeshow)
Mean VIF = 1.04	Prob > chi2 = 0.4630	Prob > chi2 = 0.3522

Sources: own survey computation (2022)

Table 7. Binary logistic regression estimation result and respective marginal effect for financial inclusion

Financial inclusion	Coef.	St.Err.	MFX^3 (dy/dx)
Religious-oriented financial service (ROFS)	0.481***	0.083	0.012
Age (AGH)	0.726**	0.513	0.025
Education level (EDUL)		.
Primary school	−0.335	0.342	−0.048
Secondary school	1.014**	0.485	0.049
Documentation Challenge(DOC)	−0.174	0.483	−0.025
Affordability (AFS)	2.012***	0.425	0.036
Financial capability (FCA)	0.0984***	0.029	0.032
Trust in traditional financial association (ToTFA)	−1.133**	0.354	−0.019
Connectivity to urban (CTN)	−0.209	0.316	−0.03
Trust for formal financial institutions (ToFFI)	0.695	0.392	0.1
Distance(DSFI)	−0.067*	0.016	−0.016
Number of observation			362
Pseudo r-squared			0.102
Chi-square			29.363
Prob > chi2			0.002

Note: *** p < .01, ** p < .05, * p < .1, respectively

Sources: own survey computation (2022)

Central Statistical Agency. (2021). Federal demographic republic of population projection of Ethiopia from 2014 – 2017: population projection of Ethiopia for All Regions At Woreda Level from 2014-2017. Central Statistical Agency (CSA), August 2013, 1–118.

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