arbiter
JournalsPricingAccount

How Does Financial Inclusion Affect Bank Stability? Evidence from the Banking Sector in Ethiopia

Abebe Birhanu Ayele et al.

Review of Middle East Economics and Finance2025https://doi.org/10.1515/rmeef-2024-0022article
ABDC C
Weight
0.50

What the paper says

Abstract Evidence confirms that financial inclusion is a key enabler for economic growth and social development by deepening the financial system and reducing poverty and income inequality. However, its association with the financial stability of commercial banks remains inconclusive. Hence, this study is sought to examine the relationships between financial inclusion and the stability of the Ethiopian Banking Sector using a sample of 16 commercial banks. The study analyzed data spanning a period of 10 years, from 2013 to 2022, collected manually from the National Bank of Ethiopia and each commercial bank’s annual reports. Using the fixed effect method of panel data analysis, the results of this study showed that greater financial inclusion activities have a positive significant influence on banks’ Z-Score and a negative significant effect on the non-performing loan ratio of commercial banks in Ethiopia at 1 and 10 percent levels of significance. Concerning the effect of bank-specific control variables, the cost-efficiency ratio, return on assets, age, and size of banks significantly influenced the stability of banks with different signs. Banks in Ethiopia should increase their accessibility and level of penetration. By expanding their branch networks, ATMs as well as providing innovative financial products to customers given the positive contribution of enhanced financial inclusion in fostering bank stability.

Open paper page →

Cite this paper

https://doi.org/https://doi.org/10.1515/rmeef-2024-0022

Or copy a formatted citation

@article{abebe2025,
  title        = {{How Does Financial Inclusion Affect Bank Stability? Evidence from the Banking Sector in Ethiopia}},
  author       = {Abebe Birhanu Ayele et al.},
  journal      = {Review of Middle East Economics and Finance},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1515/rmeef-2024-0022},
}

Paste directly into BibTeX, Zotero, or your reference manager.

Flag this paper

How Does Financial Inclusion Affect Bank Stability? Evidence from the Banking Sector in Ethiopia

Flags are reviewed by the Arbiter methodology team within 5 business days.

Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.