The Effect of Digital Financial Services on Financial Inclusion in Ethiopia

Antehun Desho

doi:doi:10.11648/j.scif.20260202.18

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The Effect of Digital Financial Services on Financial Inclusion in Ethiopia

Antehun Desho^*

Published in Science Futures (Volume 2, Issue 2)

Received: 9 December 2025 Accepted: 5 January 2026 Published: 2 February 2026

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Abstract

The digital economy is rapidly expanding globally, with the potential to significantly boost socio-economic development, particularly in developing countries. The banking industry is significantly investing on introducing digital financial services especially in developing countries like Ethiopia ultimately to achieve financial inclusion goals. Hence, this study was aimed to investigate the effect of digital financial services (DFS) for financial inclusion in Ethiopia. For this purpose, secondary data was collected from the National Bank of Ethiopia, the study specifically focused on seventeen commercial banks (panel units) from the year 2014/15 to 2023/24. The random effect model was applied to estimate the effect of explanatory variables on the variable of interest based on Hausman test results and after testing all possible assumptions of the model. Accordingly, the finding revealed that Mobile banking, ATMs, POS terminals, and Mobile Wallet Banking all has a positive and significant effect on the number of financial accounts in Ethiopia. These services are driving financial inclusion by increasing access to banking services and facilitating the opening of accounts. Internet banking appears to have a negative impact on the number of accounts, which might reflect limited access to or use of internet banking in Ethiopia, possibly due to issues like connectivity or low digital literacy. The authors propose that enhancing the adoption of digital financial services (DFS) in both rural and urban areas could play a crucial role in advancing financial inclusion. They argue that such an increase would directly support the financial inclusion strategies of policymakers and banking practitioners. By improving access to digital financial tools, individuals in these regions often underserved by traditional banking systems could be integrated into the formal financial sector.

Published in	Science Futures (Volume 2, Issue 2)
DOI	10.11648/j.scif.20260202.18
Page(s)	174-188
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2026. Published by Science Publishing Group

Keywords

Digital Financial Services, Financial Inclusion, Banking Sector, Panel Data Analysis, Ethiopia

References

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Desho, A. (2026). The Effect of Digital Financial Services on Financial Inclusion in Ethiopia. Science Futures, 2(2), 174-188. https://doi.org/10.11648/j.scif.20260202.18

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ACS Style

Desho, A. The Effect of Digital Financial Services on Financial Inclusion in Ethiopia. Sci. Futures 2026, 2(2), 174-188. doi: 10.11648/j.scif.20260202.18

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Desho A. The Effect of Digital Financial Services on Financial Inclusion in Ethiopia. Sci Futures. 2026;2(2):174-188. doi: 10.11648/j.scif.20260202.18

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@article{10.11648/j.scif.20260202.18,
  author = {Antehun Desho},
  title = {The Effect of Digital Financial Services on Financial Inclusion in Ethiopia},
  journal = {Science Futures},
  volume = {2},
  number = {2},
  pages = {174-188},
  doi = {10.11648/j.scif.20260202.18},
  url = {https://doi.org/10.11648/j.scif.20260202.18},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.scif.20260202.18},
  abstract = {The digital economy is rapidly expanding globally, with the potential to significantly boost socio-economic development, particularly in developing countries. The banking industry is significantly investing on introducing digital financial services especially in developing countries like Ethiopia ultimately to achieve financial inclusion goals. Hence, this study was aimed to investigate the effect of digital financial services (DFS) for financial inclusion in Ethiopia. For this purpose, secondary data was collected from the National Bank of Ethiopia, the study specifically focused on seventeen commercial banks (panel units) from the year 2014/15 to 2023/24. The random effect model was applied to estimate the effect of explanatory variables on the variable of interest based on Hausman test results and after testing all possible assumptions of the model. Accordingly, the finding revealed that Mobile banking, ATMs, POS terminals, and Mobile Wallet Banking all has a positive and significant effect on the number of financial accounts in Ethiopia. These services are driving financial inclusion by increasing access to banking services and facilitating the opening of accounts. Internet banking appears to have a negative impact on the number of accounts, which might reflect limited access to or use of internet banking in Ethiopia, possibly due to issues like connectivity or low digital literacy. The authors propose that enhancing the adoption of digital financial services (DFS) in both rural and urban areas could play a crucial role in advancing financial inclusion. They argue that such an increase would directly support the financial inclusion strategies of policymakers and banking practitioners. By improving access to digital financial tools, individuals in these regions often underserved by traditional banking systems could be integrated into the formal financial sector.},
 year = {2026}
}

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TY  - JOUR
T1  - The Effect of Digital Financial Services on Financial Inclusion in Ethiopia
AU  - Antehun Desho
Y1  - 2026/02/02
PY  - 2026
N1  - https://doi.org/10.11648/j.scif.20260202.18
DO  - 10.11648/j.scif.20260202.18
T2  - Science Futures
JF  - Science Futures
JO  - Science Futures
SP  - 174
EP  - 188
PB  - Science Publishing Group
UR  - https://doi.org/10.11648/j.scif.20260202.18
AB  - The digital economy is rapidly expanding globally, with the potential to significantly boost socio-economic development, particularly in developing countries. The banking industry is significantly investing on introducing digital financial services especially in developing countries like Ethiopia ultimately to achieve financial inclusion goals. Hence, this study was aimed to investigate the effect of digital financial services (DFS) for financial inclusion in Ethiopia. For this purpose, secondary data was collected from the National Bank of Ethiopia, the study specifically focused on seventeen commercial banks (panel units) from the year 2014/15 to 2023/24. The random effect model was applied to estimate the effect of explanatory variables on the variable of interest based on Hausman test results and after testing all possible assumptions of the model. Accordingly, the finding revealed that Mobile banking, ATMs, POS terminals, and Mobile Wallet Banking all has a positive and significant effect on the number of financial accounts in Ethiopia. These services are driving financial inclusion by increasing access to banking services and facilitating the opening of accounts. Internet banking appears to have a negative impact on the number of accounts, which might reflect limited access to or use of internet banking in Ethiopia, possibly due to issues like connectivity or low digital literacy. The authors propose that enhancing the adoption of digital financial services (DFS) in both rural and urban areas could play a crucial role in advancing financial inclusion. They argue that such an increase would directly support the financial inclusion strategies of policymakers and banking practitioners. By improving access to digital financial tools, individuals in these regions often underserved by traditional banking systems could be integrated into the formal financial sector.
VL  - 2
IS  - 2
ER  -

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Antehun Desho

School of International and Public Affairs (SIPA), Columbia University, New York, United State

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http://orcid.org/0009-0001-7390-5703

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APA Style

Desho, A. (2026). The Effect of Digital Financial Services on Financial Inclusion in Ethiopia. Science Futures, 2(2), 174-188. https://doi.org/10.11648/j.scif.20260202.18

Copy | Download

ACS Style

Desho, A. The Effect of Digital Financial Services on Financial Inclusion in Ethiopia. Sci. Futures 2026, 2(2), 174-188. doi: 10.11648/j.scif.20260202.18

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AMA Style

Desho A. The Effect of Digital Financial Services on Financial Inclusion in Ethiopia. Sci Futures. 2026;2(2):174-188. doi: 10.11648/j.scif.20260202.18

Copy | Download

@article{10.11648/j.scif.20260202.18,
  author = {Antehun Desho},
  title = {The Effect of Digital Financial Services on Financial Inclusion in Ethiopia},
  journal = {Science Futures},
  volume = {2},
  number = {2},
  pages = {174-188},
  doi = {10.11648/j.scif.20260202.18},
  url = {https://doi.org/10.11648/j.scif.20260202.18},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.scif.20260202.18},
  abstract = {The digital economy is rapidly expanding globally, with the potential to significantly boost socio-economic development, particularly in developing countries. The banking industry is significantly investing on introducing digital financial services especially in developing countries like Ethiopia ultimately to achieve financial inclusion goals. Hence, this study was aimed to investigate the effect of digital financial services (DFS) for financial inclusion in Ethiopia. For this purpose, secondary data was collected from the National Bank of Ethiopia, the study specifically focused on seventeen commercial banks (panel units) from the year 2014/15 to 2023/24. The random effect model was applied to estimate the effect of explanatory variables on the variable of interest based on Hausman test results and after testing all possible assumptions of the model. Accordingly, the finding revealed that Mobile banking, ATMs, POS terminals, and Mobile Wallet Banking all has a positive and significant effect on the number of financial accounts in Ethiopia. These services are driving financial inclusion by increasing access to banking services and facilitating the opening of accounts. Internet banking appears to have a negative impact on the number of accounts, which might reflect limited access to or use of internet banking in Ethiopia, possibly due to issues like connectivity or low digital literacy. The authors propose that enhancing the adoption of digital financial services (DFS) in both rural and urban areas could play a crucial role in advancing financial inclusion. They argue that such an increase would directly support the financial inclusion strategies of policymakers and banking practitioners. By improving access to digital financial tools, individuals in these regions often underserved by traditional banking systems could be integrated into the formal financial sector.},
 year = {2026}
}

Copy | Download

TY  - JOUR
T1  - The Effect of Digital Financial Services on Financial Inclusion in Ethiopia
AU  - Antehun Desho
Y1  - 2026/02/02
PY  - 2026
N1  - https://doi.org/10.11648/j.scif.20260202.18
DO  - 10.11648/j.scif.20260202.18
T2  - Science Futures
JF  - Science Futures
JO  - Science Futures
SP  - 174
EP  - 188
PB  - Science Publishing Group
UR  - https://doi.org/10.11648/j.scif.20260202.18
AB  - The digital economy is rapidly expanding globally, with the potential to significantly boost socio-economic development, particularly in developing countries. The banking industry is significantly investing on introducing digital financial services especially in developing countries like Ethiopia ultimately to achieve financial inclusion goals. Hence, this study was aimed to investigate the effect of digital financial services (DFS) for financial inclusion in Ethiopia. For this purpose, secondary data was collected from the National Bank of Ethiopia, the study specifically focused on seventeen commercial banks (panel units) from the year 2014/15 to 2023/24. The random effect model was applied to estimate the effect of explanatory variables on the variable of interest based on Hausman test results and after testing all possible assumptions of the model. Accordingly, the finding revealed that Mobile banking, ATMs, POS terminals, and Mobile Wallet Banking all has a positive and significant effect on the number of financial accounts in Ethiopia. These services are driving financial inclusion by increasing access to banking services and facilitating the opening of accounts. Internet banking appears to have a negative impact on the number of accounts, which might reflect limited access to or use of internet banking in Ethiopia, possibly due to issues like connectivity or low digital literacy. The authors propose that enhancing the adoption of digital financial services (DFS) in both rural and urban areas could play a crucial role in advancing financial inclusion. They argue that such an increase would directly support the financial inclusion strategies of policymakers and banking practitioners. By improving access to digital financial tools, individuals in these regions often underserved by traditional banking systems could be integrated into the formal financial sector.
VL  - 2
IS  - 2
ER  -

Copy | Download