Financial inclusion and its demand-side determinants: Evidence from Ethiopia

Figures & data

Table 1. Description of independent variables

Independent variables	Definition/Description
Male (male)	It is a dummy that takes the value 1 if the individual is male or 0 otherwise.
Age and age2 (age_1)	Age in years and its square.
Rural (rural)	It is a dummy that takes the value 1 if the individual lives in a rural area and 0 otherwise.
Income	In this study we proxied income with quintile of spatially adjusted total consumption per adult equivalent.
Poorest(poorest)	It is a dummy that takes the value 1 if the individual is in the lowest income quintile and 0 otherwise.
Second lowest (sec_lowest)	It is a dummy that takes the value 1 if the individual is in the second lowest income quintile and 0 otherwise.
Middle income (mid_income)	It is a dummy that takes the value 1 if the individual is in the middle income quintile and 0 otherwise.
Second highest (sec_highest)	It is a dummy that takes the value 1 if the individual is in the second highest income quintile and 0 otherwise.
richest (richest)	It is a dummy that takes the value 1 if the individual is in the top income quintile and 0 otherwise. It is the reference group.
Education	It includes both formal and informal education.
0–8 years of education (elementary)	It is a dummy that takes the value 1 if the individual completes elementary education or less is and 0 otherwise. It is the reference group.
9–15 years of education (secondary)	It is a dummy that takes the value 1 if the individual completes secondary education and some education beyond that and 0 otherwise.
> 15 years of education (tertiary)	It is a dummy that takes the value 1 if the individual completes four and above years of education after high school or completion of a four-year college degree and more and 0 otherwise.
Other(other)	It is a dummy that takes the value 1 if the individual completes informal education /basic education, adult education, alternative education, or non-regular and 0 otherwise.
Married (married)	It is a dummy that takes the value 1 if the individual is married and 0 otherwise.
Divorced/Separated (divorsep)	It is a dummy that takes the value 1 if the individual is divorced or separated and 0 otherwise.
Widowed (widowed)	It is a dummy that takes the value 1 if the individual is widowed and 0 otherwise.
Household Size (loghhsize)	Household size (number of individuals in the household) in logarithm.
Employment status	Labor force classification and definition of terms is based on the working-age population classification of the ILO.
Employed(employed_1)	It is a dummy variable that takes the value 1 if the individual is employed and 0 otherwise.
Unemployed (unemployed)	It is a dummy variable that takes the value 1 if the individual is unemployed and 0 otherwise. It is the reference group.
Out of Workforce (outlf)	It is a dummy that takes the value 1 when the individual does not have a job and is not looking for one and 0 otherwise.
Potential jobseeker (potjseek)	It is a dummy that takes the value 1 when the individual does not have a job and is looking for one and 0 otherwise.
Mobile phones (mobile_1)	It is a dummy that takes the value 1 if the individual is has mobile phone and 0 otherwise.
Region (regions_1)	It is a regional dummy that takes the value of 1 if a Regional States/City Administration is in the first group and 0 otherwise. Group 1(Tigray, Amhara, Oromia, SNNP Regional States and Addis Ababa City Administration) is the reference group.
Religion(nmuslim)	It is a dummy that takes a value of 1 if the individual is Non-Muslim and 0 otherwise.
Awareness (aware)	It is a dummy that takes the value of 1 if the respondent knows how to open an account in a formal financial institution and 0 otherwise.
Shock (shock)	It is a dummy that takes the value of 1 if the respondent is worried about being able to cover unexpected expenses and 0 otherwise.

Table 2. Account use by type of financial services

Financial services	% of users
	Total	Male	Female	Rural	Urban	Poorest	Richest
ATM/Debit card	37	43	29.1	17	41	12.9	47.6
Online banking	6	7.4	4.4	5	7	3.4	7.8
Mobile banking	13	15	9.8	7	14	2.5	18
Agent banking	2	2.5	1.6	2	2	0.4	2.8
Interest free banking	13	14	11.5	14	13	8	13

Source: Author’s calculation using ESS4 data.

Table 3. Estimation results for financial inclusion indicators

Independent variables	Account ownership (Probit)	Use of accounts for savings (Probit selection)	Account use (Probit selection)
aware	0.2694*** (0.0124)	——————————-	———————————-
shock	−0.0122 (0.0123)	−0.0075 (0.0206)	−0.0851*** (0.0216)
rural	−0.0629*** (0.0140)	0.1074*** (0.0281)	−0.0121 (0.0333)
male	0.0454*** (0.0134)	0.0217 (0.0222)	0.1277*** (0.0228)
age_1	0.0080*** (0.0009)	0.0019 (0.0019)	−0.0001 (0.0021)
regions_1	0.0460*** (0.0121)	0.0250 (0.0205)	0.0217 (0.0227)
nmuslim	0.0365** (0.0157)	0.0100 (0.0296)	−0.2476*** (0.0333)
married	0.0332** (0.0163)	0.0204 (0.0265)	−0.0696** (0.0285)
divorsep	0.0310 (0.0298)	−0.0242 (0.0459)	0.0422 (0.0501)
widowed	0.0619 (0.0435)	−0.0112 (0.0704)	−0.1210* (0.0724)
secondary	0.0515*** (0.0137)	0.0243 (0.0263)	0.1735*** (0.0243)
tertiary	0.2014*** (0.0250)	0.0492 (0.0345)	0.3958*** (0.0306)
others	0.0169 (0.0486)	−0.1503 (0.1014)	−0.0339 (0.1087)
employed_1	0.0386 (0.0330)	0.1841*** (0.0507)	0.0229 (0.0559)
potjseek	−0.0470 (0.0349)	0.0601 (0.0529)	−0.0422 (0.0610)
outlf	−0.0472 (0.0333)	0.1132** (0.0498)	−0.0219 (0.0565)
mobile_1	0.1345*** (0.0131)	————————–	0.0004 (0.0429)
poorest	−0.0907*** (0.0236)	−0.0257 (0.0560)	−0.1146* (0.0604)
sec_ lowest	−0.0858*** (0.0206)	−0.0446 (0.0401)	−0.1502*** (0.0447)
mid_income	−0.0492*** (0.0181)	−0.0373 (0.0308)	−0.0982*** (0.0333)
sec_highest	−0.0383** (0.0160)	−0.0646** (0.0261)	−0.1085*** (0.0258)
loghhsize	−0.0502*** (0.0125)	−0.0276 (0.0201)	0.0348 (0.0217)
constant	−3.0741*** (0.2884)	−0.0797 (0.3754)	−0.0981*** (0.4618)
observations	8,767	8,767	8,703

Source: Author’s calculation using ESS4 data.

NB: -Account ownership, use of accounts for saving, and account use are dependent variables.

-Coefficients with *, **, and *** are significant at 10%, 5% and 1% significance levels respectively.

-Figures in parentheses are robust standard errors calculated using delta-method.

-Coefficients are average marginal effects.

- Figures are rounded to four digits.

-STATA 14 is used.

Table

ADB	Asian Development Bank
ADBI	Asian Development Bank Institute
AfDB	African Development Bank
AFI	Alliance for Financial Inclusion
ATM	Automated Teller Machine
BOT	Bank of Tanzania
CA	Cooperative Authority (Ethiopia)
ESS4	Ethiopia Socioeconomic Survey Wave 4
GAFI	Global Alliance for Financial Inclusion
ILO	International Labor Organization
NBE	National Bank of Ethiopia
RBI	Reserve Bank of India
SACCO	Savings and Credit Cooperative Organization
SNNP	Southern Nations and Nationalities People (Ethiopia)
UK	United Kingdom
UNCTAD	United Nations Conference on Trade and Development
USD	United States Dollar
WB	World Bank

Figure A1. Formal account ownership and use by gender.

Figure A2. Formal account ownership and use by residence.

Figure A3. Formal account ownership and use by marital status.

Figure A4. Formal account ownership and use by consumption quintile.

Figure A5. Formal account ownership and use by educational level.

Figure A6. Formal account ownership and use by employment status.

Figure A7. Formal account ownership and use by religion.

Figure A8. Formal account ownership and use by awareness level.

Figure A9. Formal account ownership by Regional States and City Administrations.

Figure A10. Formal account use by Regional States and City Administrations.

Figure A11. Regional States/City Administrations account use by financial service type.

Figure A12. Formal account use for saving by Regional States and City Administrations.

Figure A13. Reported reasons for not having an account.