Drivers of financial literacy among households of Wolaita Zone, Southern Ethiopia

The main objective of the study was to assess the level of financial literacy and to identify economic and demographic factors that shape financial literacy finance in Wolaita Zone, Southern Ethiopia. A cross sectional data was collected from 217 households who are living in four districts (Humbo, Kindo Didaye, Damot Gale and Kindo Koyisha) of Wolaita zone in 2018. Ordinary least square (OLS) approach had used to identify the main determinants of financial literacy scores. The OLS estimation results revealed that education, ownership of cell phone, annual total income and age of the household head have positive effect on financial literacy. While, household living in rural area and long distance from bank/IMF have negatively and significantly affect financial literacy scores. The policy implication is that financial institutions and policy makers should give due attention for financial literacy program in order to bringing financially excluded people in to formal financial sector and in creating sustainable and efficient financial market. Financial literacy training to rural people is important to reduce the information asymmetry knowledge gap, to strengthen financial discipline and to enable them to make informed financial decisions.