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Abstract

This study examines the determinants of access to formal financial institutions using secondary household survey data from Indonesian Family Life Survey, Wave 5 (IFLS-5). Logistic regression analysis reveals that loan amount, savings, education level, age, housing status, and internet usage are positively and significantly associated with greater access. Individuals with higher savings, higher education, and homeownership exhibit a higher probability of utilizing formal financial services. Although the significance of internet usage varies across models, it remains a strong predictor when properly controlled, particularly due to its role in enhancing digital literacy. In contrast, income and health insurance ownership do not demonstrate a significant effect. These findings highlight the importance of financial inclusion, as traditional economic indicators, demographic behaviors, and technological advancements shape public preferences for formal financial services. Expanding financial inclusion therefore requires leveraging human development, internet penetration, and financial literacy by promoting financial services, encouraging savings behavior, enhancing financial literacy programs at the school level, and fostering the adoption of digital banking.

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