The micro determinants of financial inclusion and financial resilience in Africa

This study analyzes the factors influencing financial inclusion and financial resilience in Africa. Using national surveys of 40 African countries and the doing business database, multiple models are performed to analyze financial inclusion drivers. The results show that individual characteristics, barriers to formal accounting, financial literacy and innovation condition the decision to have a traditional or mobile account. Informal savings are common among women, youth and in rural areas while formal savings predominate among men, the elderly and in urban areas. A high level of education and income leads people to migrate to formal savings. For business purposes, informal savings are preferred while for old age, individuals resort to formal savings because of interest rates. Social lifestyles make informal credit predominate in Africa. However, when people have employment, high income or education, they turn more to formal credit to preserve their reputation because of the respect and popularity they enjoy in their community. Marriage, financial literacy and innovation improve the resilience of individuals, while employment increases their vulnerability. Key policy recommendations are to improve the banking sector, institutions, innovations and income-generating activities to attract women and reduce the gender gap.