Determinants of Formal Financial Services Utilization in Afghanistan

Research Aims: Financial inclusion is a critical driver of economic growth and poverty reduction, yet Afghanistan continues to face significant challenges in this domain. This study examines financial inclusion trends in Afghanistan from 2011 to 2021. Design/methodology/approach: The methodology used in this study is quantitative approach using Global Findex data, focusing on account ownership, savings, borrowing and digital payments. An independent samples t-test is employed to assess whether differences between these demographic and socio-economic groups are statistically significant. Research Findings: The findings reveal financial inclusion is too low in Afghanistan with the mean percentage usage of account ownership 11%, savings 3%, borrowings 4.25% and digital payments 8.33%. Hypotheses results highlight that women, younger individuals, those with primary education or less and those out of the labour force are significantly less likely to own accounts, save at financial institutions, or use digital payments compared to their counterparts. Borrowing from financial institutions shows no significant differences across most groups. Theoretical Contribution/Originality: The findings provide valuable insights for policymakers and financial institutions to design inclusive strategies that address financial accessibility gaps. Research limitation and implication: this study is limited to the Global Findex database and does not capture detailed individual experiences or urban-rural differences in financial behaviour. Future research could address these gaps by incorporating qualitative insights and exploring regional disparities to provide a more comprehensive understanding of financial inclusion dynamics.