The study examines the determinants of access to and usage of financial services in sub-Saharan Africa. The study employed panel data spanning 2006 to 2018 from 12 sub-Sahara African countries. The ex-post facto research design and econometric techniques were employed to explain the determinants of financial inclusion. The descriptive statistics was employed to describe the nature of the data. The LLC and IPS tests of stationarity indicated that all the variables were stationary at first difference. The Pearson pairwise correlation test revealed that the strength of association among the regressors were weak. The panel data was estimated using Pooled OLS, Fixed Effects, and Random Effects panel estimation techniques.
The findings show that aside GDP per capita and political stability that had insignificant effect on access; money supply and regulatory quality had a significant effect on access to financial services. Furthermore, the findings suggest that aside from regulatory quality and deposit rate, GDP per capita and automated teller machine exerts a significant effect on financial usage. The study further reveals that money supply and lending rate significantly stimulates usage of loan accounts, while regulatory quality was insignificant.
The study concludes that a combination of macroeconomic, institutional, and bank-level factors determine the level of financial inclusion in sub-Saharan Africa. The study recommends that regulators should encourage a conducive environment that spurs competition and innovation in the private sector. This may encourage financial access and usage due to economic growth and rising GDP per capita levels. Regulators should adopt policies like Regulatory Impact Assessment (RIA) in order to enhance the regulatory quality and boost public confidence. Regulators and banks should encourage the expansion of the number of functional point of service outlets in the region. Finally, government agencies should formulate policies that would encourage socio-political stability for the financial service industry to strive in the region.
Table of Contents
CHAPTER I: INTRODUCTION
1.1 Background to the study
1.2 Statement of the problem
1.3 Objectives of the study
1.4 Research Questions
1.5 Research Hypotheses
1.6 Significance of the study
1.7 Scope of the Study
CHAPTER II: LITERATURE REVIEW
2.1 Conceptual Review
2.1.1 Financial Inclusion: Definition and Dimensions
2.1.2 Dimensions of Access and Usage of Financial Services
2.1.3 Determinants of Access to and Usage of Financial Services
2.1.4 Barriers to Financial Inclusion
2.1.5 Conceptual Model
2.2 Theoretical Framework
2.2.1 Financial Deepening Hypothesis
2.2.2 New Institutional Economic (NIE) Theory
2.2.3 Demand-Following Hypothesis
2.2.4 Dissatisfaction Theory
2.2.5 Vulnerable Group Theory
2.2.6 Systems Theory
2.3 Empirical Review
2.3.1 Determinants of Ownership of Deposit Accounts
2.3.2 Determinants of Ownership of Loan Accounts
2.3.3 Determinants of Expansion of Bank Branch Outlets
2.3.4 Determinants of Access to and Usage of Financial services
2.3.5 Demand-side Factors that Determine Access to and Usage of Financial Services
2.3.6 Other Related Extant Studies
2.4 Summary of Empirical Review
2.5 Literature Gap
CHAPTER III: RESEARCH METHODOLOGY
3.1 Research Design
3.2 Population of the Study
3.3 Sample of the study
3.4 Sources of Data
3.5 Model Development
3.6 Measurement and Operationalization of Variables
3.7 Model Specification
3.8 Methods of Data Analysis
CHAPTER IV: DATA PRESENTATION AND ANALYSIS
4.1 Data Presentation
4.2 Data Analysis
4.2.1 Descriptive Statistics
4.2.2 Panel Unit Root Test
4.2.3 Correlation Analysis
4.2.4 Panel Regression Analysis
4.2.5 Hypotheses Testing
4.3 Discussion of Findings
4.3.1 Determinants of Bank Branch Expansion in SSA
4.3.2 Determinants of the Number of Deposit Accounts in SSA
4.3.3 Determinants of the Number of Loan Accounts in SSA
CHAPTER V: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of Findings
5.2 Conclusion
5.3 Recommendations
5.4 Contributions to Knowledge
5.5 Limitations to the Study
5.6 Suggestions for Further Studies
Research Objectives and Thematic Focus
The primary objective of this dissertation is to examine the determinants of financial inclusion—specifically access to and usage of financial services—within the Sub-Saharan African (SSA) region. The study employs panel data analysis to investigate how macroeconomic, institutional, and bank-level factors influence the number of commercial bank branches, deposit accounts, and loan accounts across 12 selected African nations between 2006 and 2018.
- The impact of macroeconomic indicators such as GDP per capita and broad money supply on financial inclusion.
- The role of institutional quality, including regulatory standards and political stability, in shaping financial access.
- The influence of banking infrastructure and technology (e.g., automated teller machines) on financial service usage.
- The effects of financial variables like deposit and lending interest rates on the utilization of formal bank accounts.
- The identification of barriers and drivers that impact both the unbanked and the underbanked population to foster inclusive growth.
Excerpt from the Book
2.1.1 Financial Inclusion: Definition and Dimensions
Financial inclusion typifies banking the unbanked by promoting and expanding outreach and consumption of mainstream services rendered by financial intermediaries (Chen and Jin, 2016). Central in the agenda for financial inclusion is the promotion and expansion of ownership of deposit accounts, loan accounts, and access to a broad range of quality financial services by the vulnerable and other classes of the society. According to (Central Bank of Nigeria, 2012), financial inclusion simply means “a state in which all people have access to appropriate, desired financial products and services in order to facilitate enhanced financial and economic well-being.” Thus, policies of financial inclusion are tailored at “creating an enabling environment and developing innovative financial solutions to facilitate access to financial services to a bigger part of the population, by lifting the barriers” (Soumare et al., 2016:232).
Financial availability, accessibility and usage are the three basic objectives of financial inclusion strategy. This connotes that availability begets access and access begets use, given an existing demand. Thus, the supply and demand of financial services is a precursor to an inclusive system. Financial access simply entails the supply of financial products like savings account, customer or credit card loans, etc. and services, like insurance, investment, retirement planning and the likes of it (Chen and Jin, 2016). Financial products help the transfer of liquidity from surplus units to deficit economic actors, through the intermediation networks available. This liquidity circulating function is said to be a stimulant to economic growth (Soumare et al., 2016; Markjackson, Ekokeme, Nelson and Okoyan, 2017). Financial usage, on the other hand, entails participation in formal financial networks. This implies the consumption of mainstream financial products and services. The use of financial products and services is predicated on availability, ease of access and the perceived benefits from it. For instances, this means that, if an economic agent needs an account there should be a ready supply of the type and the conditions for opening the account should not be cumbersome.
Summary of Chapters
CHAPTER I: INTRODUCTION: This chapter introduces the core research problem, defining financial inclusion as a critical driver for economic growth and highlighting the low levels of banking penetration in Sub-Saharan Africa.
CHAPTER II: LITERATURE REVIEW: This chapter explores the conceptual and theoretical foundations of financial inclusion, examining existing academic literature on the macroeconomic and institutional determinants of financial access and usage.
CHAPTER III: RESEARCH METHODOLOGY: This section details the research design and econometric techniques utilized, including the panel data model specification and measurement operationalization for the study variables.
CHAPTER IV: DATA PRESENTATION AND ANALYSIS: This chapter provides the empirical results, including descriptive statistics, correlation matrices, unit root tests, and panel regression analysis to determine the factors influencing financial inclusion.
CHAPTER V: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS: The final chapter synthesizes the study's empirical results, presents conclusions regarding the drivers of financial inclusion, and offers policy recommendations to enhance regional financial access.
Keywords
Financial Inclusion, Sub-Saharan Africa, Deposit Accounts, Loan Accounts, Bank Branch Networks, GDP per Capita, Broad Money Supply, Regulatory Quality, Political Stability, Financial Intermediation, Banking Penetration, Automated Teller Machines, Econometrics, Inclusive Growth, Financial Exclusion
Frequently Asked Questions
What is the core focus of this research?
The research fundamentally investigates the determinants of financial inclusion (both access and usage of financial products) within the context of Sub-Saharan African countries, analyzing the influence of various macroeconomic, institutional, and bank-level factors.
What are the primary themes analyzed in the study?
The study focuses on three primary dependent variables: the number of commercial bank branch networks (access), the number of deposit accounts (usage), and the number of loan accounts (usage), evaluating their relationship with various regional socioeconomic and regulatory variables.
What is the primary research objective?
The broad objective is to identify and analyze which economic and institutional variables significantly influence the levels of financial access and usage in the 12 selected Sub-Saharan African countries, thereby addressing the region's historical challenges with financial exclusion.
Which scientific methodology does the author employ?
The research employs an ex-post facto research design and utilizes quantitative econometric techniques, specifically panel data estimation methods such as Pooled OLS, Fixed Effects, and Random Effects, to evaluate data spanning the period from 2006 to 2018.
What topics are covered in the main body?
The main body treats the conceptual and theoretical framework of financial inclusion, provides an extensive literature review on the drivers of financial services, details the construction of several econometric models, and reports the empirical findings based on the panel data analysis.
Which keywords best characterize the work?
The key themes characterizing the work are financial inclusion, Sub-Saharan Africa, money supply, bank branch networks, regulatory quality, political stability, and econometric modeling of financial service usage.
How does regulatory quality impact financial services?
The study suggests that regulatory quality is a critical factor for establishing a conducive financial system, although the empirical findings on its direct impact on specific account types can be mixed depending on whether the regulatory framework is sufficient to build public trust and minimize financial risk.
What is the role of digital infrastructure like ATMs?
The research concludes that the expansion of automated teller machines acts as a significant determinant of financial inclusion, serving as a vital conduit that reduces transaction costs and brings banking services closer to underserved and rural populations.
- Quote paper
- Dumani Markjackson (Author), 2021, Determinants of Financial Inclusion in Sub-Saharan Africa, Munich, GRIN Verlag, https://www.grin.com/document/1437588
