Determinants of Access to Banking Services in Malawi
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Date
2018-08-04
Authors
Chipeta, Chinyamata
Kanyumbu, Esmie
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research consortium
Abstract
The study aims to investigate the determinants of access to banking services in
Malawi, taking into account that limited coverage of banking services especially
in rural areas, has been constraining sustainable economic development. To
explore the determinants of access to banking services in Malawi, household-level data
from the FinScope Malawi 2008 and 2014 surveys of demand for financial services
was used. From both an analysis of cross-tabulation of frequency of responses and a
regression analysis, the study establishes that the degree of access to banking services
rises in ascending order from rural to peri-urban to urban areas, and that the degree of
access to banking services rises with rising levels of income. It also found that the degree
of access to banking services is high among those who receive salaries and pensions
and those residents who conduct business or earn rental income, as well as those who
receive transfers and remittances from other people. Conversely, the degree of access
to banking services is low among those who receive low and irregular incomes, such as
smallholder farmers and casual workers. It is further established that access to banking
services rises with higher levels of education and that distance to the nearest bank
branch is negatively correlated with access to banking services. Another outcome is
that financial innovation encourages access to banking services. Furthermore, the study
notes that the above factors are interrelated. From the results of the study, suggestions
are offered on how to improve access to banking services in Malawi.