Original Research

Understanding the drivers of financial inclusion in South Africa

David Mhlanga, Steven H. Dunga, Tankiso Moloi
Journal of Economic and Financial Sciences | Vol 14, No 1 | a594 | DOI: https://doi.org/10.4102/jef.v14i1.594 | © 2021 David Mhlanga, Steven H. Dunga, Tankiso Moloi | This work is licensed under CC Attribution 4.0
Submitted: 20 June 2020 | Published: 31 May 2021

About the author(s)

David Mhlanga, Department of Accountancy, College of Business and Economics, University of Johannesburg, Johannesburg, South Africa
Steven H. Dunga, Department of Economics, Faculty of Economic and Management Sciences, North-West University, Johannesburg, South Africa
Tankiso Moloi, Department of Accountancy, College of Business and Economics, University of Johannesburg, Johannesburg, South Africa


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Abstract

Orientation: Financial inclusion is becoming one of the attractive topics at the global level with policymakers, development partners, governments and financial institutions developing interest in understanding it more deeply.

Research purpose: The study sought to establish the drivers of financial inclusion in South Africa with a focus on factors that influences ownership of an investment account.

Motivation for the study: Motivated by the increase in the evidence of the importance of financial inclusion in fighting poverty and the fact that by merely having a bank account, financial inclusion cannot be guaranteed, the study interrogated the factors that influence households to have an investment account.

Research approach/design and method: As the dependent variable of financial inclusion was binary, the logistic regression was used to estimate the drivers of financial inclusion. The variable assumed two values 0 and 1, where 1 represents access to an investment account and 0 otherwise.

Main findings: Using the logit model, the study discovered that financial inclusion is driven by age, education level, the total salary proxy of income, race, and marital status.

Practical/managerial implications: The differences in the probability of demand for financial products and services amongst the different races mean that products and services tailor-made to satisfy the needs of the different races, for coloured and black people these products and services should be designed to improve financial inclusion amongst them.

Contribution/value-add: The study managed to discover the factors that influences households to have an investment account in South Africa.


Keywords

financial inclusion; logit model; drivers; South Africa; investment account

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