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Identifying Factors That Influence Access to Banking Services in Bangladesh: a Household Level Analysis

Soma Dey
Faculty of Business Administration, BGC Trust University Bangladesh, Chandanaish, Chittagong, Bangladesh

Sacchidanand Majumder
Dhaka Ahsania Mission (DAM), Dhaka, Bangladesh.

Abstract/ Executive Summary:

This study, employing a logistic regression model seeks to identify the important factors that influence household’s access to banking services. The result shows that about 31.7% households have bank account while the remaining 68.3% households have no such account. The result found that with the increase in age of household’s head access to banking services increased gradually. As observed, female headed household have greater access to banking services as compared to male headed household. More so, formerly/ever married headed households have less access to banking services by comparison with never married headed households. The result also shows that access to banking services gradually increased with increasing education level of household’s head. It is found that poor households have very less access to banking services as compared to non-poor households. Increased land ownership of household allowed gradual increase in the access to banking services. The result also mentions that non owner homestead households have less access to banking services as compared to own homestead households. According to the logistics regression analysis, comparing with the rural households it has been found that the urban households have more access to banking facilities.

Keywords: Bank account, Household, Logistic regression analysis, Livelihood

Location: Faculty of Business Administration, BGC Trust University Bangladesh, Chandanaish, Chittagong, Bangladesh

Start Date: 00-00-2014

End Date: 00-00-2014

Program Area: Resource Development and Management

Non-commodity: Livelihood

Objectives:

To investigate the current scenario of household access to banking services and identify the factors that influence access to banking services in Bangladesh.

Methodology:

The data used to analyze access to banking services is drawn from Demographic and Health Surveys (DHS) 2014 for Bangladesh. The survey is based on a two-stage stratified sample of households. In the first stage, 600 enumeration areas (EAs) were selected with probability proportional to the EA size, with 207 clusters in urban areas and 393 in rural areas. In the next step, a complete household listing operation was carried out in all the selected EAs to provide a sampling frame for the second-stage selection of households. In the second stage of sampling, a systematic sample of 30 households on average was selected per EA to provide statistically reliable estimates of key demographic and health variables for the country as a whole, for urban and rural areas separately, and for each of the seven divisions. Finally, 17,300 households were 84 Dey and Majumder surveyed and the data have been collected, summarized and presented in the Bangladesh DHS report. In this study, all 17,300 households are considered for the analysis of access to banking services in Bangladesh. In this research, contingency table is constructed to verify whether there is any association between dependent and independent variables. Chi-square test of independence is applied to examine the effect of household characteristics in access to banking services. To identify the factors most strongly associated with it, the entre method of logistic regression model is performed. The analysis uses logistic regression, which estimates model with a binary response and a set of explanatory variables. In logistic regression model, a dichotomous variable, access to banking services are introduced to determine whether the household has bank account or not.

Source of Information: Bangladesh J. Sci. Res. 30(1&2): 81-89, 2017 (December)

Article Link (Online Journal):

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

Household access to basic banking services, such as savings accounts, is the first step towards financial security of household. Household access to banking services is influenced by household socio-economic characteristics. The present study investigates the factors that influence access to banking services in Bangladesh. The multivariate result implies that formerly/ever married headed household has less access to banking services as compared to currently married and never married headed household. So, government and respective financial institutions should develop effective mechanism and give flexibility to formerly/ever married headed households for ensuring access to banking services. The result illustrates that increase in educational level of household’s head, the probability of access to banking services is gradually increased. This study focuses on the point that education plays a significant role in access to banking services. In this context, Bangladesh needs to prioritize education seriously since the experience in developing countries has proved its potential. People should be encouraged to send their children to schools or other educational institutions in ensuring education for all members. In this situation, policy and decision-makers should review the policies for achieving this target. The government should consider allocating more financial resources to the education sector. It is found that poor household has less access to banking service than non-poor household. At this point, the government, respective financial institutions and policymakers should review the policies for ensuring poor people’s access to banking services. The study shows that with increasing access to information, the probability of access to banking services is increased. The government, respective financial institutions and policymakers should review the policies for increasing access to information. The study demands a flexible policy from the part of government and authority of financial institutions for increasing access to banking services for landless people, non-owner homestead households and rural people.

Knowledge Management: Journal