Research Article
An Analysis of Household Borrowing Behavior: Evidence on Institutional Choice, Mobile Money, and Credit Demand Drivers in Ethiopia
Tesema Tadesse Milkano*
Issue:
Volume 1, Issue 2, June 2026
Pages:
98-115
Received:
21 April 2026
Accepted:
3 June 2026
Published:
8 July 2026
DOI:
10.11648/j.ib.20260102.11
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Abstract: This study investigates household borrowing behavior in Ethiopia using data from the 2025 Global Findex Survey. The analysis employs Generalized Structural Equation Modeling (GSEM) to examine five financial inclusion outcomes: mobile money account ownership, receipt of mobile money credit, formal borrowing, borrowing from friends and family, and participation in informal savings groups (iqub/ROSCAs). The results reveal a segmented financial ecosystem in which access to financial services is shaped by education, borrowing purpose, and demographic characteristics. Mobile money account ownership is strongly associated with higher educational attainment, active saving behavior, urban residence, and female gender, while age and income exert relatively limited effects. In contrast, receipt of mobile money credit is only weakly related to socioeconomic characteristics and is primarily associated with health- and business-related borrowing needs, suggesting that digital credit functions mainly as a liquidity management tool. Formal borrowing is driven largely by business-related financing needs rather than demographic factors, indicating that formal financial institutions primarily support productive investments. Borrowing from friends and family serves as a key source of financing for health, food, and business expenditures, highlighting the continued importance of informal networks in household risk management and consumption smoothing. Participation in informal savings groups is more common among younger individuals and is positively. Therefore, expanding digital financial inclusion, strengthening access to formal credit, and leveraging informal financial institutions as complementary channels could contribute to a more inclusive and resilient financial system.
Abstract: This study investigates household borrowing behavior in Ethiopia using data from the 2025 Global Findex Survey. The analysis employs Generalized Structural Equation Modeling (GSEM) to examine five financial inclusion outcomes: mobile money account ownership, receipt of mobile money credit, formal borrowing, borrowing from friends and family, and pa...
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