Financial inclusion in South Africa - Influencing factors and public policy

This paper explores the effectiveness of public policy in increasing financial inclusion. A large data set is used comprising repeat household surveys undertaken over a ten-year period. Contrary to previous results, the paper provides evidence of the strong impact of policy on access to financial services in South Africa. South Africa adopted a formal financial sector consensus model and, together with private sector development, succeeded in increasing access to financial services to the previously unbanked. The findings suggest that between 2005 and 2014, the most significant factors associated with financial inclusion were income, education level and age. Furthermore, those with a tertiary education were 31% more likely to have a bank account than those in the lowest education category. Policies to address the gender gap appear to have had a measure of success as the findings of this study indicate that women were 3.8% more likely to have a bank account than men. The findings further reveal that those from a black ethnic background remain less likely to be banked. Further policy interventions are therefore required.