The Singapore Economic Review, Vol. 63, No.

1 (2018) 9–26
© World Scientific Publishing Company
DOI: 10.1142/S0217590818410011

DETERMINANTS AND BARRIERS TO FINANCIAL INCLUSION

IN MYANMAR: WHAT DETERMINES ACCESS TO FINANCIAL
SERVICES AND WHAT HINDERS IT?

KANITTHA TAMBUNLERTCHAI
Faculty of Economics, Chulalongkorn University
Phayathai Road, Bangkok 10330, Thailand
[email protected]

Published 8 November 2017

This paper examines two aspects of financial inclusion in the context of Myanmar. First, it examines
the factors that determine access to formal savings products. Second, it looks at what the barriers to
saving are. Using data from a nationally representative survey of 5100 individuals, the paper applies
econometric estimation and qualitative data analysis methods to provide answers to these questions.
Findings show a low level of saving in Myanmar, and that formal savings increase with income,
education, and keeping a budget, among other factors. Policy recommendations include the design
of financial literacy programs that are suitable to the Myanmar context, and providing access to
financial services.

Keywords: Financial inclusion; household saving; personal finance.

JEL Classification: D14, G21

1. Introduction
There is growing evidence from both empirical analysis and randomized controlled
experiments that access to financial services has many positive benefits. At the macro-
economic level, financial sector deepening has been shown to have positive impacts on
economic growth and stability, especially in developing countries (see, e.g., Anwar and
Nguyen, 2011; Easterly et al., 2001; King and Levine, 1993; Pasali, 2013; Yilmazkuday,
2011). Studies have also linked financial access with a reduction in rural poverty (Burgess
and Pande, 2005) and increases in income levels (Bruhn and Love, 2013). At the micro-
economic level, access to financial services is positively associated with increased con-
sumption, well-being, and business activities (see, e.g., Attanasio et al., 2011; Banerjee
and Duflo, 2011; Dupas and Robinson, 2013).
Recognizing the many positive benefits of financial inclusion, world leaders and several
country governments are taking steps to further the financial inclusion agenda. Among
the G20 countries, leaders have approved the Financial Inclusion Action Plan and estab-
lished the Global Partnership for Financial Inclusion (GPFI) to drive the financial access

9
10 The Singapore Economic Review

agenda forward. In Southeast Asia, within the Association of Southeast Asian Nations
(ASEAN), there is recognition of the issue’s importance. Following the ASEAN Financial
Inclusion Conference in October 2014, the Yangon Outcomes for Financial Inclusion in
ASEAN was published. Included in the document is the recommendation that financial
inclusion be promoted as a policy objective under the Equitable Economic Development
pillar of the ASEAN Economic Community (AEC) blueprint. At the national level, several
countries both within and outside of the ASEAN region have formulated their own policies
to promote financial inclusion in their respective economies. One of them is the govern-
ment of Myanmar, which sees access to financial services as a means for achieving
development goals such as poverty reduction, social development, fostering good financial
habits and encouragement of micro, small and medium enterprises (MSMEs) (Chamberlain
et al., 2014).
Despite the benefits of financial inclusion and the growing interest from policymakers
and financial sector stakeholders, the Global Financial Inclusion (Global Findex) data
indicate that for adults in the 148 countries surveyed, only about half report having an
account at a formal financial institution (‘banked’) (Demirguc-Kunt and Klapper, 2012).
When looking only at the sample from developing countries, the number of banked
individuals greatly decline. It is reported that the share of adults who are banked in
developed countries is more than twice the share of banked individuals in low income
countries. With mounting evidence pointing to the benefits of financial inclusion, an im-
portant policy question is how to expand the reach of financial services. This paper
examines this policy question in detail, by looking at the determinants and the barriers to
the adoption of formal savings products using individual-level dataset in Myanmar.
By looking at the factors that enhance or detract from financial inclusion in Myanmar,
this paper makes the following contribution to the existing literature. First, it examines the
issue of financial inclusion in a unique setting where both the economy and the financial
sector are still in the nascent stages of development, and where the financial inclusion
agenda is driven primarily by the government and nongovernmental organizations. Second,
the paper uses a rich dataset which asks respondents an array of factual and attitudinal
questions regarding their financial lives. Such detailed demand-side information is difficult
to find, especially for a country which has been closed off to the Western world until
recently such as Myanmar. With the dataset, the paper is able to determine whether
the factors which drive or hinder financial access come from limitations in infrastructure,
and/or individual’s perception. These answers provide important information for policy-
makers looking to further the financial inclusion agenda in similar settings.

2. Background Information on Myanmar

2.1. Socio-economic conditions and development goals
The economy of Myanmar is quickly changing. In 2015 and 2016, the economy grew
by 7% and 5.9%, respectively (ADB, 2017), and the Asian Development Outlook (ADB,
 Determinants and Barriers to Financial Inclusion in Myanmar 11

2017) forecasts growth in the country to be at 8% in both the 2017 and 2018 fiscal years.1
This means that the economy of Myanmar is growing at a higher rate than the aggregate
growth for the 10 Southeast Asian nations, which is approximately 5% in 2015 (ADB,
2017). Such rapid growth, coupled with ongoing reforms in the country’s political, eco-
nomic, and administrative aspects are important driving forces that are transforming
Myanmar as a nation.
Despite high economic growth and many positive developments in the past few years,
Myanmar is still one of the poorest nations in Southeast Asia and is still in the early stages
of development. Its estimated population of 61 million people has an average income of
3.50 USD per day with approximately half of the population earning less than 2 USD per
day (Chamberlain et al., 2014). A large proportion of the population still lives in rural
areas, and earnings from farming are reported to be the dominant source of income for a
third of the population.2 However, average income in urban areas is twice that of the rural
areas. While only approximately 7% of adults have higher education (Chamberlain et al.,
2014), literacy rate is high, at 96% (ADB, 2016). Unemployment in the nation is still low,
at 3.4% of the total labor force, lower than the 4.5% average for the East Asia and the
Pacific region and the 5.1% figure for low income countries (World Bank, 2015a).
In terms of internet connectivity and mobile phone penetration, Myanmar still has a
fairly low rate compared with others. 1.2 out of 100 people are internet users, and 0.2 out
of 100 are subscribers of fixed broadband internet. For developing countries in East Asia
and the Pacific region, fixed broadband internet subscription figure is 10.5 per 100 people
and the average for low income countries is 0.3. Mobile cellular subscription is still in the
early stages of development, with 12.8 people out of every 100 having mobile phones. This
is low compared with the 54.6 per 100 people for low income countries and 95.5 for the
East Asia and the Pacific region. (World Bank, 2015a). However, the numbers are quickly
changing.

2.2. Financial sector

The financial sector in Myanmar is still small and relatively less developed than its
Southeast Asian peers. However, reforms of the sector have been ongoing since 2011 and
the financial landscape of Myanmar is undergoing tremendous changes. As it stands, the
financial sector is dominated by banks, which holds some 99% of formal financial sector
assets (Turnell, 2014). As of March 2013, there are 24 banks in Myanmar, 4 of which are
wholly stated-owned, 9 are semi-state owned banks, and 11 are private banks3 (KPMG).
The banking sector is dominated by the four state-owned banks, which account for two-
thirds of total banking assets in the country (GIZ, 2013).
In terms of infrastructure, the three types of banks together have approximately 1100
bank branches (Turnell, 2014), mostly concentrated in Yangon, Mandalay, Nay Pyi Taw
and a few other urban centers (GIZ, 2013). In 2013, half of the bank branches belong to

1 FiscalYear 2017 ends 31 March 2018.

2 However, on the whole, the agricultural sector has a lower value added to GDP than the industrial sector.
3 There are also 33 foreign bank representative offices in Myanmar (KPMG, 2013).
12 The Singapore Economic Review

state-owned banks, although the situation is quickly changing with private and semi-state
owned banks rapidly expanding their branch networks (GIZ, 2013). Nonetheless, financial
infrastructure is still limited (Duflos et al., 2013). Two state-owned banks which serve rural
areas are Myanmar Economic Bank (MEB) and Myanmar Agriculture Development
Bank (MADB). As its name suggests, MADB targets those in the agricultural sector,
especially farmers.
While banks dominate in terms of assets and scale of operation, financial services,
especially microfinance services, are provided by an array of institutions, which can be
classified either as regulated4 (formal) or unregulated (informal).5 In addition to banks,
formal institutions include insurers, microfinance institutions (MFIs), cooperatives, and
pawnshops (Chamberlain et al., 2014). In addition to MADB, providers of microfinance
services include registered microfinance institutions, nonbank government organizations,
cooperatives, pawnshops, political organizations, nongovernmental organizations (NGOs)
and multi-lateral organizations such as UNDP, the World Bank and the Consultative Group
to Assist the Poor (CGAP) (KPMG, 2013).

2.3. Financial inclusion

In Myanmar, financial inclusion is an important goal. Promotion of financial access is seen
as a means to achieve greater social and economic development goals that would foster the
prosperity of the country and improve the well-being of citizens. As such, the government
of Myanmar has taken a leading role in driving forward the financial access agenda in the
country. Along with international NGOs working in Myanmar, a number of programs and
building blocks aimed at creating an enabling environment for financial inclusion have
been, and are being laid down.
Financial inclusion in Myanmar is still low. A nationally representative survey of
individuals conducted in 2013, FinScope Myanmar, finds that only 30% of the adult
population are formally served6 and that 39% of the adult population in Myanmar are
financially excluded.7 The survey also finds that 31% of the adult population use only
informal financial services. Uptake of financial services varies by service category. Uptake
of credit is highest, at 47% of the adult population. Uptake of savings products comes next
at 38%, followed by financial transactions services8 at 26%. Uptake of insurance products
is smallest at 7% of the adult population.
In summary, there is a low level of uptake of formal financial services in Myanmar, and
a sizeable portion of the population rely wholly on unregulated financial service providers.
This means that citizens of Myanmar often have to pay high costs for financial services
(Chamberlain et al., 2014). Furthermore, since unregulated service providers are often

4 Regulated institutions are those which are regulated for the provision of financial services.
5 Unregulated financial service providers include rice specialization companies, agricultural input providers, unregulated
money-lenders, community-based assistance groups, hundis, and unregulated pawnshops (Chamberlain, 2014).
6 Formal financial service providers are those which are regulated for providing financial services.
7 Financial exclusion is defined as adults who do not use any financial products or services (formal or informal) to manage
their financial lives.
8 Defined as secure mechanisms in which funds can be deposited, transmitted, and withdrawn.
 Determinants and Barriers to Financial Inclusion in Myanmar 13

smaller with less professional management, users of such services are often exposed to
higher risks, especially the risk of the financial institution failing and going out of business.
As such, provision of financial services by the formal financial sector and subsequent uptake
of such services form an important part of the financial inclusion agenda in Myanmar.

3. Literature Review
There is consistent evidence from the academic literature that points to the many benefits
of financial access, especially for low-income individuals and households. For example,
studies have found that access to financial services is positively associated with poverty
reduction, increased consumption, higher well-being, and increased business activities
for small-scale and women entrepreneurs (see, e.g., Attanasio et al., 2011; Banerjee and
Duflo, 2011; Bruhn and Love, 2013; Burgess and Pande, 2005; Dupas and Robinson,
2013). This is especially true for savings products. While less studied than credit products,
savings products have been more consistently associated with positive effects compared
with credit products. Positive effects of access to formal savings products include increases
in savings, productive investment, consumption and female empowerment (see, e.g.,
Aportela, 1998; Ashraf et al., 2006, 2010, 2011; Dupas and Robinson, 2013).
In light of these studies, the relevant policy question for Myanmar is how to improve
access to formal financial services. This is especially true for access to savings products,
which is still low compared to credit products, and to the rate of savings account usage
in other countries in Southeast Asia. As Campero and Karen (2013) point out, there are
two sides to financial access. On the one hand are the supply side factors that determine
the availability of financial products and services. On the other hand are the demand side
factors that determine uptake of the available products and services. For financial in-
clusion, data limitations had meant that supply side factors were more examined than
demand side factors, which required detailed individual-level data for analysis. How-
ever, efforts by various organizations have now made individual-level data available,
and, as a result, the effects of individual-level factors on financial access are beginning
to be reported.
While there have been relatively fewer studies which examine demand side factors at
the individual level, existing studies have looked into the role played by socio-economic,
geographic and psychometric factors in determining access to financial products and
services. Socio-economic factors examined include the respondent’s age, gender, income,
education, and employment status. Factors such as income and education are consistently
found to have a positive association with access to financial services. Other factors such as
living in urban areas, employment status, marital status, and gender have also been found
to be significant in some of the studies (see, e.g., Allen et al., 2012; Fungacova and Weill,
2014; Honohan and King, 2012; Mitton, 2008; Pena et al., 2014). Cross-country results
also indicate that the extent of the impact of such factors on being formally banked varies
from country to country (Honohan and King, 2012), and that ownership and use of formal
accounts are associated with country-specific characteristics such as cost of using bank
accounts and proximity to financial intermediaries (Allen et al., 2012).
14 The Singapore Economic Review

In addition to socio-economic and country-specific contextual factors, individual

perceptions and attitudes matter for financial decision-making (World Bank, 2015b). When
this happens, decision-making can deviate from predictions of outcomes based on the
rational decision-maker assumption. According to North (1995), individuals make choices
based on their mental models. As such, individual perceptions could be a driving factor
when individuals make financial decisions such as whether or not to use a formal savings
product. Studies from psychology also indicate that financial decisions could be driven by
emotional impulses and a focus on short-term gains, especially for low-income individuals
(see, e.g., Baumeister et al., 2007; Shah et al., 2012). Under such circumstances, small
emotional factors could impose hindrance on prudent financial choices such as the use of
savings products (Mullainathan and Shafi, 2009). Furthermore, attitudes have been found
to affect the extent to which individuals save with individual development accounts in the
US (Han and Sherraden, 2009).
In addition to determinants of ownership and use of formal financial products and
services, some studies have also examined the barriers to formal financial inclusion.
Looking at the case of China, Fungacova and Weill (2014) examine how individual
characteristics affect reasons for not having a formal account. The paper finds that income
and age are related to many explanations for not having a formal account, while gender and
education are associated with a smaller number of explanations. When looking at barriers
to having formal deposit accounts using global cross-country individual-level data, Allen
et al. (2012) finds that barriers to account ownership include costs, lack of necessary
documentation, distance to financial service provider, and lack of money. In both studies,
the extent to which different reasons obstruct uptake of formal financial service depends on
individual-specific characteristics.
In summary, the literature on financial inclusion indicates that there are many positive
benefits associated with formal financial inclusion, especially the ownership and use of
formal savings products. A survey of the demand-side literature also reveals that many
individual-level factors affect the uptake and use of formal financial services. In addition to
socio-economic characteristics such as income and education, factors that could influence
formal financial access include perceptions and attitudes of individuals. From the per-
spective of those who are formally excluded, barriers include high costs of account
ownership, lack of money, and unavailability of necessary documentation. Such barriers
interact with individual-specific factors in determining formal financial exclusion for dif-
ferent individuals.

4. Data and Methodology

The dataset used in this study comes from the FinScope Myanmar9 survey conducted in
2013. FinScope Myanmar is a nationally representative survey designed to obtain a better

9 FinScope is a survey developed by FinMark Trust and, at the time of the Myanmar survey, FinScope has been conducted in
18 countries in Africa and Asia.
 Determinants and Barriers to Financial Inclusion in Myanmar 15

understanding of the financial lives of adult individuals in the country.10 As a consumer

survey, FinScope elicits information on the demand side of financial inclusion. FinScope
Myanmar forms one core part of the Making Access Possible (MAP) diagnostic tool
designed to support expanded access to financial services in the country. The survey was
overseen by a national steering committee, which is chaired by the Myanmar Microfinance
Supervisory Enterprise (MMSE). A total of 5100 face-to-face interviews were conducted
by Myanmar Survey Research (MSR) from July to August 2013.
In order to understand the factors that determine access to formal savings products, this
paper employs a limited dependent variable model (Maddala, 1994; Greene, 2013). The
dependent variable being a dummy variable taking the value 1 if the respondent uses at
least one savings product at a formal financial institution, and 0 otherwise. Independent
variables for the regression can be classified into four categories. The first group is the
financial attitudes group such as reports of stressful feelings when dealing with finances
and the respondent’s attitudes towards saving. The second group is the financial behavior
group and includes factors such as keeping track of income and expenditures, and thinking
carefully before spending. The third group is the geographical location group. The fourth
group is the socio-economic characteristics of the respondents. Details of the variables are
given in Table A.1. Summary statistics are provided in Table A.2.
To determine factors affecting access to formal savings products, two probit regressions
are estimated with the difference between the two being the inclusion of the employment/
income variables. In Model 1, two income variables are included: whether or not the
respondent receives a regular monthly income, and whether or not the respondent has
money to spend as he/she wishes. In Model 2, five employment/income regressors are
added. Respondents are classified into different types of consumers based on their main
source of income. These are informal consumers, formal entrepreneurs, informal entre-
preneurs, self-employed famers, and farm workers.11 Another income group, comprising
those whose main source of income is employment in the formal sector, serves as the
reference group for the regression to prevent multicollinearity problems.
In order to determine the main barriers that limit the uptake of savings products,
this paper specifically considers those who did not save at the time of the survey. Thus, the
sub-sample for the barriers analysis includes those who did not save and those who only
saved in-kind. It does not include those who saved at formal financial institutions, and
those who saved at informal financial institutions. Qualitative information is derived for
this group in order to determine the main reasons for financial exclusion. The data for this
part of the analysis come from the question on the FinScope questionnaire which asks
respondents who did not save in cash to give reasons for not saving. The relevant question
is provided in Table A.3.

10 For Myanmar, this is defined as the 18þ population.

11 These correspond to the variables infconsumer, fent, infent, selffarm, and wagefarm respectively. See Table A.1 for a
description of the variables.
16 The Singapore Economic Review

5. Results
5.1. Determinants of formal financial inclusion
Results from the two limited dependent variable regressions are reported in Table A.412
and provide information on the determinants of formal financial inclusion in terms of
savings product usage. Findings from the econometric analysis suggest that financial
attitudes such as the feeling of stress when dealing with financial matters, and the various
attitudes towards saving are not significant determinants of uptake of formal savings
products. For both models, none of the coefficients and marginal effects for the variables in
this group are statistically significant. Thus, these results suggest that attitudes towards
financial management and saving are not significant determinants of formal saving.
Results for the financial behavior group indicate that not all behaviors are conducive to
uptake of formal savings products. Of the three regressors in this group, the one behavioral
trait which increases the likelihood of saving at a formal financial institution is the tracking
of income and expenditures on a regular basis. Both the coefficients and the marginal
effects of this regressor are positive and statistically significant in both models. However,
other behavioral factors such as thinking carefully before spending and going without
certain things in order to save are not significant determinants of uptake of formal savings
products. Such results indicate that knowledge of one’s financial status is a more important
predictor of formal saving than behavioral traits that make one more conducive to saving such
as thinking carefully before spending and going without certain things in order to save.
In terms of the importance of geographical factors, probit results show that all three
variables in this group are important determinants of saving at a formal financial institu-
tion. Those who live close to public transportation, in urban areas, or near to bank branches
are significantly more likely to save at a formal financial institution compared with those
who do not have these factors. Of the three variables, the factor that exhibits the strongest
effect is accessibility to public transportation. This is followed by living in urban areas, and
living near bank branches. This indicates that the proximity to banks per se is less im-
portant than the ability to travel to banks for saving at formal financial institutions. A better
public transportation network therefore can extend the reach of formal financial institutions
to serve customers who do not live in close geographical proximity to financial institutions.
This finding also suggests that access channels for digital and mobile banking services
that make it easier for customers to contact formal financial institutions can help extend
financial inclusion in Myanmar.
Socio-economic factors that are shown to be important for access to formal savings
products are age, income, and education. Likelihood of using formal savings products
increases with all three variables. For example, educational attainment at the primary level
is not a significant determinant of formal saving product usage while secondary level
education and higher education are significant. Those who receive higher education and
those with qualifications at the upper secondary level are more likely to use formal savings
products compared with those with lower secondary education. These results are consistent

12 Results from robustness checks are available upon request from the author.
 Determinants and Barriers to Financial Inclusion in Myanmar 17

with previous studies, which indicate that income and education are significant determi-
nants of formal financial inclusion (see, e.g., Fungacova and Weill, 2014; Honohan and
King, 2012; Pena et al., 2014).
Results from Model 2 show that nonfarmers whose main source of income comes from
the informal sector are significantly less likely to have formal financial access in terms of
savings. This group comprises those who are employees in the informal sector and those
who are self-employed and operate in the informal sector. By contrast, being self-employed
in the formal sector is not a significant predictor of having formal savings access. This may
be due to the fact that the formal self-employment category covers a broad range of jobs
and earnings. Furthermore, being a farmer is not a significant determinant of having formal
savings products. This is true regardless of whether or not the farmers are self-employed or
are farm workers.

5.2. Barriers to saving

This part of the results provides the reasons why some people do not save. Results from
FinScope Myanmar show that only about 7% of adults were saving with formal financial
institutions at the time of the survey. Twenty five percent used only informal financial
institutions to save, 6% saved but kept their savings at home,13 while 62% of the adult
population did not have savings at the time the survey was conducted in 2013. These
figures represent a high level of financial exclusion for the savings category. For neigh-
boring Thailand, FinScope Thailand data (Finscope Thailand, 2013) show that the level of
exclusion from formal savings products at the national level is 42%, with 32% of the adult
population not saving at the time of the survey. The counterpart figures from FinScope
Myanmar are 93% exclusion from formal savings products, and 62% not saving.
When asked to provide the main reason for not saving, around half of the respondents
replied that all the money they had went into household expenses, making this the most
cited reason for not having any savings. The second most-cited reason for the lack of
savings is that they had no money left after paying for living expenses (27.7%). The third
most-cited reason is not having any income (15.6%). Those who save in kind comprise
6.4%. Reasons such as “not seeing the benefit of saving” and “not knowing how to save”
account for only a small fraction of the responses (less than 0.5% for both categories). The
lack of a service provider is not cited by any of the over 3000 respondents as being the
main reason for their not saving (see Figure A.1.).
When looking at the socio-economic statistics for the sub-sample of respondents who
were not saving at the time of the survey, the data show that those who do not have savings
at formal financial institutions tend to be those who do not have regular monthly income,
are financially dependent on others, and have lower educational attainment compared with
those who save formally. There is also a higher proportion of those employed in the
informal sector. However, other factors such as age, gender, and marital status are similar
across those that save and those that do not.

13 This group represents those who do not save with any financial institution (formal or informal).
18 The Singapore Economic Review

6. Conclusion
This paper examines two aspects of financial inclusion. First, the research asks what factors
determine saving at formal financial institutions. Second, the paper looks at what the
barriers are to saving (at any type of financial institution — formal and informal — or at
home). The paper contributes to the existing literature on this topic by examining financial
inclusion in a unique setting where both the economy and the financial sector are still in the
nascent stages of development, and where the financial inclusion agenda is driven pri-
marily by the government and nongovernmental organizations. Furthermore, the paper uses
a rich demand-side, individual-level dataset that allows examination of factors such as
attitudes and perceptions, in addition to socio-economic and financial factors that could
affect formal financial access.
Findings regarding the determinants of formally saving, and the barriers to saving in
cash both indicate that the major obstacle to saving in Myanmar is insufficient income, or,
at least, the perception that there is insufficient income after expenses are paid. This point is
reflected in the econometric results. Those who report that they do not have regular
monthly income or do not have their own money to spend as they wish are less likely to
have formal savings products. In addition, those who work in the informal sector are less
likely to have formal savings products, regardless of whether they are self-employed or
employed by someone else.
Education is one other socio-economic factor that is a significant determinant of formal
financial inclusion in terms of savings. Results from the econometric part of the study
clearly indicate that the lower the level of educational attainment, the lower the likelihood
of using formal savings products. Geographical location also matters for formal saving
uptake, with those in nonurban areas, those who live farther from public transportation, and
those that live farther from banks being less likely to have formal savings products. The
tendency to track one’s finances is a behavioral trait associated with formal financial
access, as those who regularly keep track of their income and expenditures are significantly
more likely to have formal financial products. However, an individual’s attitudes towards
finances and towards saving do not seem to affect formal financial uptake.

7. Policy Recommendations
To foster financial inclusion in terms of savings, findings from this paper suggest that it is
important to have financial literacy programs that allow individuals to know their financial
circumstances. People who keep track of their finances have an increased likelihood of
formal savings uptake. Based on the experience in other countries, keeping a financial
diary could induce saving because as people are more aware of their expenses, they tend to
spend more carefully, thereby reducing expenses. While incomes might not have increased,
with reduced expenditures there is now money left to be saved. Encouraging individuals to
keep financial diaries to track their income and expenditures could result in increased
formal saving by individuals. For a country with a high literacy rate such as Myanmar
(ADB, 2016), financial literacy programs that teach participants financial skills such as
how to keep financial diaries could help improve the low rate of saving in the country.
 Determinants and Barriers to Financial Inclusion in Myanmar 19

Results from the study also provide information on what not to include in financial
literacy programs for Myanmar. While FinScope Thailand conducted at around the same
time as FinScope Myanmar (2013) finds that many Thais feel stressed when managing
their financial lives (Diaz and Achavanuntakul, 2013), results from this study suggests that
this is not a problem in Myanmar. As such, programs aimed at fostering financial capa-
bilities in Myanmar need not include components that create incentives for people to
overcome budget stress. Similarly, results from this study show that there is little need for
components of financial education programs that foster savings behavior such as thinking
carefully before spending, or going without certain things in order to save. Econometric
results do not support the hypothesis that these behaviors affect uptake of formal savings in
the Myanmar context.
This paper finds that formal financial access could be bolstered by providing appro-
priate infrastructure such as more branches of financial institutions that offer savings
products. Providing access to public transportation can also extend the reach of formal
financial institutions by allowing more people to physically access financial institutions.
Other channels that could facilitate access include using mobile bank branches such as
trucks and vans to provide access in remote areas, and laying down the infrastructure
for mobile phone banking. These examples have been implemented in other countries,
and have helped to extend the reach of formal financial access especially for people
in remote areas without convenient access to public transportation and formal
financial institutions.
Finally, the results of this paper indicate that the low levels of saving in Myanmar at
both the formal and informal levels are driven primarily by income constraints. While
income may be coming in, most people do not save because they feel there is not enough
money left to save after expenditures have been paid. This suggests that policies that seek
to increase savings rates in Myanmar should address the income — expenditures balance
problem. To get people to save more, income should be increased, or expenditures should
be reduced, or both should be done. Depending on the target population, income sup-
plementary methods such as skills trainings could be provided. Experience in other
countries indicates that development of appropriate savings products that are suited to low-
income groups could help address the saving problem. Savings products that get low-
income earners to commit to saving small amounts regularly have been shown to help
increase savings (see, e.g., Ashraf et al., 2003; Brune et al., 2011).
As Myanmar continues to implement reforms in its financial sector to foster financial
inclusion, and as the economy continues to grow at a rapid pace, significant improvements
in the financial sector and in socio-economic factors are expected in the coming years.
With rapid growth comes increased income, and with measures aimed at fostering financial
inclusion come a greater number of financial institutions that increasingly offer services to
low-income individuals. These forces, coupled with policies that come from careful ana-
lyzes on the demand side of financial inclusion, would pave the way for an increased level
of saving in Myanmar and allow access to formal savings products to individuals who were
formerly excluded.
20 The Singapore Economic Review

Appendix A. Tables and Figures

Table A.1. Description of Variables

Variables Description

Dependent Variable
FSave Dummy ¼ 1 if respondent saves at a formal financial institution
Financial Attitude
finstress Dummy ¼ 1 if respondent agrees that dealing with finance is stressful or a
burden
saverain Dummy ¼ 1 if they respondent agrees that he/she has to save for difficult times
safe Dummy ¼ 1 if respondent agrees that saving means putting money in a place to
keep it safe
uselater Dummy ¼ 1 if respondent agrees that saving means putting money aside to use
later for a specific purpose
increase Dummy ¼ 1 if respondent agrees that saving means putting money away so that
the total increases over time as more is put away
Financial Behavior
trackfin Dummy ¼ 1 if respondent agrees when asked if he/she keeps track of his/her
income and expenditures on a monthly basis
thinkspend Dummy ¼ 1 if respondent thinks carefully before making a spending decision
gowithout Dummy ¼ 1 if respondent agrees that he/she can go without certain things to be
able to save
Location
nearbank Dummy ¼ 1 if respondent lives within less than 1 hour of a bank branch
pubtrans Dummy ¼ 1 if respondent lives within less than 1 hour of public transportation
access.
Urban Dummy ¼ 1 if respondent lives in urban areas
Socio-economic Characteristics
age Respondent’s age (in years)
age_sq Square of the respondent’s age
gender Dummy ¼ 1 if respondent is female
maritalstatus Dummy ¼ 1 if respondent is married
mthlyinc Dummy ¼ 1 if respondent has regular monthly income
ownmoney Dummy ¼ 1 if respondent has money of his/her own to do as he/she wishes
primedu Dummy ¼ 1 if respondent’s highest level of education is at the primary level
lowsecedu Dummy ¼ 1 if respondent’s highest level of education is at the lower secondary
level
hisecedu Dummy ¼ 1 if respondent’s highest level of education is at the upper secondary
level
higheredu Dummy ¼ 1 if respondent’s highest level of education is higher than the upper
secondary level
infconsumer Dummy ¼ 1 if respondent works in the informal sector
fent Dummy ¼ 1 if respondent is self-employed and works in the formal sector
 Determinants and Barriers to Financial Inclusion in Myanmar 21

Table A.1. (Continued)

Variables Description

infent Dummy ¼ 1 if respondent is self-employed and works in the informal sector

selffarm Dummy ¼ 1 if respondent is self-employed and works as a farmer
wagefarm Dummy ¼ 1 if respondent earns a wage and works in a farm

Table A.2. Summary Statistics

Variables Mean S.D. Min Max

Dependent Variable
FSave 0.07 0.25 0 1
Financial Attitude
finstress 0.69 0.46 0 1
saverain 0.71 0.46 0 1
safe 0.06 0.24 0 1
uselater 0.56 0.50 0 1
increase 0.10 0.30 0 1
Financial Behavior
trackfin 0.62 0.49 0 1
thinkspend 0.84 0.36 0 1
gowithout 0.44 0.50 0 1
Location
nearbank 0.50 0.50 0 1
pubtrans 0.89 0.32 0 1
Urban 0.26 0.44 0 1
Socio-Economic Characteristics
age 43.82 14.89 18 98
age_sq 2141.46 1400.44 324 9604
gender 0.58 0.49 0 1
maritalstatus 0.72 0.45 0 1
mthlyinc 0.41 0.49 0 1
ownmoney 0.28 0.45 0 1
primedu 0.47 0.50 0 1
lowsecedu 0.18 0.39 0 1
hisecedu 0.11 0.32 0 1
higheredu 0.05 0.23 0 1
infconsumer 0.43 0.50 0 1
fent 0.05 0.23 0 1
infent 0.10 0.30 0 1
selffarm 0.31 0.46 0 1
wagefarm 0.05 0.23 0 1
22 The Singapore Economic Review

Table A.3. Reasons for Not Saving

Ask if respondent does not save/put money aside

Why Do You Not Have Savings?

1 No money after living expenses

2 All money into household expenses
3 No income, therefore can’t save
4 Don’t know how to save
5 No service provider
6 Don’t see the benefit of saving/not necessary
7 Save in kind
8 Other (specify)

Table A.4. Results from Probit Regression

Model 1 Model 2
Variables Coefficients Marginal Effects Coefficients Marginal Effects

finstress
0.0172
0.0017
0.0167
0.0016

(0.0677) (0.0069) (0.0685) (0.0066)
saverain 0.0352 0.0035 0.0348 0.0033
(0.0752) (0.0074) (0.0760) (0.0071)
safe
0.0381
0.0037
0.0731
0.0066
(0.1382) (0.0131) (0.1392) (0.0119)
uselater
0.0844
0.0085
0.1083
0.0105
(0.0709) (0.0072) (0.0720) (0.0070)
increase 0.1723* 0.0194 0.1534 0.0163
(0.1038) (0.0130) (0.1053) (0.0123)
trackfin 0.1721** 0.0167** 0.1705** 0.0158**
(0.0725) (0.0068) (0.0733) (0.0066)
thinkspend 0.1552 0.0142* 0.1312 0.0116
(0.1040) (0.0087) (0.1056) (0.0086)
gowithout 0.0970 0.0098 0.0896 0.0087
(0.0642) (0.0066) (0.0651) (0.0063)
nearbank 0.1182 0.0118 0.1476* 0.0141**
(0.0744) (0.0075) (0.0754) (0.0072)
pubtrans 0.2580* 0.0219** 0.2901** 0.0230***
(0.1376) (0.0097) (0.1390) (0.0089)
Urban 0.1307 0.0138 0.2145** 0.0225**
(0.0800) (0.0089) (0.0863) (0.0098)
age 0.0276** 0.0028** 0.0213* 0.0020*
(0.0126) (0.0013) (0.0129) (0.0012)
 Determinants and Barriers to Financial Inclusion in Myanmar 23

Table A.4. (Continued)

Model 1 Model 2
Variables Coefficients Marginal Effects Coefficients Marginal Effects
age_sq
0.0002
0.00002
0.0001
0.00001
(0.0001) (0.00001) (0.0001) (0.00001)
gender 0.0130 0.0013 0.0860 0.0081
(0.0645) (0.0064) (0.0671) (0.0063)
maritalstatus 0.0501 0.0049 0.0580 0.0054
(0.0724) (0.0070) (0.0734) (0.0067)
mthlyinc 0.1411** 0.0145** 0.2145*** 0.0213***
(0.0684) (0.0072) (0.0733) (0.0075)
ownmoney 0.3466*** 0.0397*** 0.3316*** 0.0361***
(0.0655) (0.0085) (0.0669) (0.0082)
primedu 0.1535 0.0155 0.1478 0.0143
(0.1047) (0.0107) (0.1062) (0.0103)
lowsecedu 0.2653** 0.0306* 0.2401** 0.0261*
(0.1207) (0.0158) (0.1222) (0.0150)
hisecedu 0.5692*** 0.0814*** 0.5191*** 0.0693***
(0.1267) (0.0239) (0.1299) (0.0226)
higheredu 1.0631*** 0.2127*** 0.9721*** 0.1797***
(0.1392) (0.0424) (0.1447) (0.0408)
infconsumer
0.2465**
0.0230**
(0.1251) (0.0115)
fent 0.0451 0.0045
(0.1443) (0.0148)
infent
0.4172***
0.0302***
(0.1478) (0.0080)
selffarm 0.1500 0.0151
(0.1379) (0.0145)
wagefarm
0.1883
0.0156
(0.2192) (0.0156)
Constant
3.4794***
3.3309***
(0.3262) (0.3605)
Log likelihood
995.84
977.56
Chi-square 306.54*** 343.11***
Psuedo-R2 0.1334 0.1493
Percent correctly specified 93.14 93.16

Note: *¼significant at the 10% level, **¼significant at the 5% level, ***¼significant at the 1% level;
Standard errors in parentheses.
24 The Singapore Economic Review

Percent
60.00
49.96
50.00
40.00
27.72
30.00
20.00 15.56

10.00 6.36
0.16 0.24
0.00
No money All money in No income Don't know Don't see Save in kind
a
er living household how to save the benefit
expenses expenses of saving
Reason For Not Saving

Figure A.1. Primary Reason for Not Saving

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