Access to Credit and Households’ Borrowing Behavior in East Africa

Simple item page
dc.contributor.authorLotto, Josephat
dc.date.accessioned2020-10-22T11:38:25Z
dc.date.available2020-10-22T11:38:25Z
dc.date.issued2019
dc.description.abstractThe primary objective of this paper is to examine how the borrowing behavior of households in the East African region are influenced by their demographic characteristics- gender, age, income and education using Tobit regression. The paper employs survey data adapted from the World Bank's 2017 Global Findex. The results show that male-headed households borrow more often than female-headed households, and that older head of households are more likely to participate in borrowing activities than their younger counterparts. Generally, the results reveal that the household whose age is relatively small should be more indebted and will have a lower level of income, and consequently fewer physical assets. This is due to the life-cycle theory which suggests that younger households have expectations of their income to rise in the future as opposed to the older households, who are heading to retirement. So, they are more willing to borrow and acquire durables and other assets due to their hopes and expectation of getting more income in the future. On the other hand, the findings reveal that the education of the head of the household is the enabling factor for the household to borrow due to the financial literacy awareness one can derive from education. The income level of the household is also considered as the determining factor of the household's borrowing likely-hood. Since borrowing requires the guarantee in terms of borrower's income, the higher the income levels of the borrower the more likely the individual will receive the loan from the lenders. Despite household's education, age and income the results also show that the gender of the households influences the borrowing behavior of the households and that women may not have the borrowing power and ability as compared to their men counterparts. This may be due to their inability to have collateral and guarantees used as loan back-up, their poor financial education awareness, and lower business experience. Therefore, understanding households' borrowing behavior in East Africa is very important, and the results of the study may be of policy interest towards the strengthening of the East African Community financial inclusion agenda. Also, the study commends governments of the East African region to promote households' borrowing and increase opportunities for household investment in achieving intended economic growth.en_US
dc.identifier.issn2615-3726
dc.identifier.urihttp://154.72.94.133:8080/xmlui/handle/123456789/113
dc.language.isoenen_US
dc.publisherJournal of Economics and Businessen_US
dc.subjectBorrowing Behaviours, Age, Gender, Income, Education, Financial Inclusionen_US
dc.titleAccess to Credit and Households’ Borrowing Behavior in East Africaen_US
dc.typeArticleen_US

Files

Original bundle

Now showing 1 - 1 of 1
Thumbnail Image
Name:
Access to Credit and Households’ Borrowing Behavior in.pdf
Size:
1.44 MB
Format:
Adobe Portable Document Format
Description:
Download

License bundle

Now showing 1 - 1 of 1
No Thumbnail Available
Name:
license.txt
Size:
1.71 KB
Format:
Item-specific license agreed upon to submission
Description:
Download

Collections

Journal Articles