Financial inclusion, regulation and inclusive growth in Ethiopia

Abstract

The study found out that despite huge progress in the last ten years, financial inclusion is still very low. One of the major problems in enhancing financial inclusion is lack of physical access. Recently, the National Bank of Ethiopia has discouraged more financial institutions to join the financial sector by raising the paid-in capital for both commercial banks (566 per cent) and microfinance institutions (900 per cent). In addition, access to the existing banks has also worsened by the recent financial regulation that led banks to operate through extremely conservative lending policy, though this policy may reduce future non-performing loans for banks, which is very positive. This paper is an output of the Grant “Financial regulation in low-income countries: Balancing inclusive growth with financial stability” funded by the DFID-ESRC Growth Research Programme (DEGRP)