Determinants of Financial Inclusion for Youth Entrepreneurs: Evidence from Addis Ababa City and Shirka Wereda, Ethiopia

Partnership for Economic Policy (PEP), Degife Ketema; Abel Tewolde; Senayit Seyoum
What is it?

This study identified and examined the factors that affected the financial inclusion of young people in selected sites in Ethiopia using local-level data collected with a Community-Based Monitoring System approach.


We collected data from 4,928 young respondents in Addis Ketema sub-city (in Addis Ababa) and in Gobesa Town and Mitana Gado (in Shirka Wereda). The study used binary logit analysis to examine factors that contributed to the financial inclusion of youth, a multinomial logistic regression to investigate the preferences of youth for financial providers, an ologit analysis to quantify the use of financial services, and propensity-score matching to examine the effect of financial inclusion on income. Our data showed that 65.32% of respondents had access to financial services, though more of these were young men than young women. Financial literacy, religion, repayment period, age, technology use, and access to informal sectors had varying impacts on the financial inclusion of young people. Based on these results, we recommend improving access to financial services through financial training, efforts to harmonize financial services with religion, the introduction of the latest technologies, and limitations on collateral requirements. Because of the disproportionate effect of gender on financial inclusion, programs that target young women will have a greater impact.

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