Access of Financial Service: Supply Side Barriers in the Banking Industry of Ethiopia

Abstract

This paper reviews the financial access to the broad population in Ethiopia and analyses the main barriers of providing financial service particularly the banking products to the broad adult population in Ethiopia. The study focused on the supply side barriers which are transaction costs, lack of adopting information technology and the regulatory framework in which the financial systems operate. Indeed, Improving access of financial service such as saving, credit facilities, insurance, remittance etc to the broad adult population through formal financial institutions is playing most essential role in reducing poverty in developing country to help them invest in productive assets and it’s the source of income for the dependent household at the time the income earner became sick or unable to work. Ethiopia is one of the developing sub-Saharan African countries around 90 percent of the population excluded from formal financial institutions.

Keywords: Financial access, Supply side barriers, Information technology, Regulatory framework, banking industry.