Effect of Financial Technology on Financial Inclusion in Ethiopia: A Systematic Review

Abstract

This systematic review examines the impact of financial technology innovations on financial inclusion in Ethiopia, using the Technology Acceptance Model and Diffusion of Innovation theory. It analyzes the role of digital financial services, such as internet banking, ATMs, and point-of-sale systems, in addressing Ethiopia’s historically low participation in the formal financial sector. Covering empirical, analytical, and policy literature from 2005 to 2025, the review finds that while DFS have expanded access and reduced transaction costs, adoption is still limited by challenges like low financial literacy, inadequate digital infrastructure, gender disparities, and regulatory uncertainty. Key factors influencing financial inclusion include financial innovation, poverty levels, financial sector stability, economic conditions, financial literacy, and regulatory frameworks, which often vary due to issues like poor system maintenance. The paper concludes that sustainable financial inclusion in Ethiopia requires investments in connectivity, consumer protection, and pro-poor financial products, offering targeted policy recommendations for the National Bank of Ethiopia and commercial banks to foster a transition from cash-based to digitally inclusive finance. It also highlights areas for future research, addressing ongoing challenges in achieving broad financial inclusion.