Determinants for the use of financial services in Tanzania: A study of behavioural factors

Abstract

This study focuses on exploring the determinants of the use of financial services in Tanzania with respect to the role of household behavioural factors. This is achieved by attempting three interrelated research questions: i) What are the financial experiences of households in Tanzania? ii) What are beliefs held by households in Tanzania about the use of financial services? iii) What are the effects of household behavioural characteristics for intention to use financial services and subsequent usage of financial services? Both quantitative and qualitative research methods are employed to achieve the research objective.
The empirical findings suggest that behavioural factors matter for the use of financial services. Firstly, the examination of household financial experiences on a sample of 30 households through the application of financial diary methodology revealed a variety of household financial experiences that highlight the necessity of financial services to households. Secondly, despite the fact that most households do not use financial services, it is found that households hold positive beliefs about financial services for saving facilities, security, finance, money management and improving economic well-being. Thirdly, structural equations models indicate that attitudes towards financial services, perceived behavioural control and subjective norms significantly impact the intention to use financial services. Perceived behavioural control is observed to prominently influence the use of financial services.
The study offers the following contributions: Firstly, it develops a behavioural conceptual framework that integrates financial and psychological perspectives. This framework facilitates a broader understanding of the determinants for the use of financial services from various perspectives. Secondly, it provides distinct insights into the influence of behavioural characteristics in the use of financial services. This adds to the limited empirical literature about the determinants for the use of financial services specifically the effects of behavioural factors. Based on the findings, implications for financial inclusion initiatives and relevant future research have been identified.