Abstract
The purpose of this study is to investigate the factors influencing financial inclusion in Tanzania. This includes financial literacy, socio-economic, digital and institutional factors. The data were obtained from a cross-sectional survey conducted by Financial Sector Deepening Trust in 2023. It included 7918 respondents from 148 districts. Baseline probit, control function and instrumental variable probit regression analyses were performed to account for any endogeneity problems relating to financial literacy. The econometric analysis indicates that there is a positive relationship between financial education and financial inclusion for all three models. The estimated coefficients varied substantially across specifications, raising concerns about their sensitivity to endogeneity assumptions. The diagnostic tests indicated that there was no significant level of multicollinearity within the explanatory variables. The control function residual was significant indicating there was evidence of endogeneity relating to financial literacy. Educational attainment, employment status, owning a mobile phone, having a national identity and living in an urban area were all positively related to financial inclusion. Digital and institutional factors showed mixed relationships. The results show that there are still inequalities between those who have access to formal financial services. Recommendations were made to improve financial education, increase availability of mobile financial services, improve financial infrastructure in rural areas and increase availability of national identification.
Recommended Citation
Mpojota, Amour S.; Mushi, DEOGRASIAS P.; and Ngasamiaku, Wilhelm
(2026)
"Determinants of Financial Inclusion in Tanzania,"
Business Management Review: Vol. 29:
No.
3, Article 10.
Available at: https://doi.org/DOI.ORG
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