The Determinants of Financial Inclusion in Vietnam: A Demand-Side Approach

While a large body of studies has captured macro financial inclusion on the supply side, this research paper contributes significantly to the literature on determining financial inclusion in Vietnam from the demand side. The primary target of this paper is to measure an overall financial inclusion index by employing micro data of 1,002 respondents in Vietnam from the World Bank. Additionally, based on the calculation of financial inclusion index, we investigate the determinants of financial inclusion and examine the barriers to financial inclusion in Vietnam. The ordinary least squares regression analysis and logit regression are employed to estimate the effect of demographic characteristics and the barriers to financial inclusion. The main findings reveal that people who are female, wealthier, more educated, or in the workforce exhibit a higher financial inclusion index. Besides, the financial inclusion level of high-income people is not affected by working status, while this level of middle and low-income people does. Women are also less likely to be financially included because they complain that financial institutions are too far away or because another family member has an account. Older people are more concerned about lack of documentation, lack of trust, and demand reasons. To achieve the purposes of robustness, the measurement of financial inclusion was changed following previous studies to confirm robust and stable baseline results. Accordingly, these findings contribute to issuing adequate policies that break the barriers to financial inclusion and enhance financial inclusion, especially for less educated, poor, out of the workforce, and old people.