Financial Inclusion in Nigeria: Regional Disparities and Determinants (2012-2020)

Financial inclusion is widely recognised as a critical driver of inclusive growth and poverty reduction; however, substantial regional disparities persist in Nigeria in terms of access to and usage of financial services. This study analyses the trends and major determinants of financial inclusion across Northern and Southern Nigeria. The period covers 2012-2020, using nationally representative data based on EFInA’s Access to Financial Services Surveys. Key areas of financial inclusion involved in the analysis include payments, savings, credit, insurance, and pensions. Using a repeated cross-sectional approach, the research applies the techniques of Pooled Ordinary Least Squares (OLS), Logit and Probit models to estimate the impact of the major socio-economic and infrastructural determinants on financial inclusion. The results demonstrated wide and statistically significant regional gaps, where the South continues to perform better than the North in all the indicators. Financial inclusion is positively influenced by infrastructure, education and income, but negatively by regional location. The results also indicates that the marginal impact of the better infrastructure is stronger in Northern Nigeria, suggesting higher prospects of the targeted measures. The study concludes that inclusive financial development in Nigeria can only be attained through region-specific and structurally based policy measures. The study recommends the targeted infrastructure development especially in Northern Nigeria due to the greater marginal effect on financial inclusion. It also recommends expansion of digital financial services, intensification of region-specific financial literacy initiatives, and adoption of income-enhancing policies to effectively deal with structural disparities and to ensure inclusive financial development in Nigeria.

Financial inclusion; Inclusive development; Regional disparities; Repeated Cross-Sectional; Socio-economic determinants.

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