Impact of Financial Inclusion on Green Investments in Rural Areas of Nigeria

Impact of Financial Inclusion on Green Investments in Rural Areas of Nigeria

Ahunanya, Ojoma Victoria

Department of Economics, Federal University Lokoja

DOI: https://dx.doi.org/10.47772/IJRISS.2025.90300061

Received: 19 February 2025; Accepted: 25 February 2025; Published: 29 March 2025

ABSTRACT

This study examines the impact of financial inclusion on green investments in rural areas of Nigeria, with the aim of assessing how access to financial services can promote environmentally sustainable practices and economic resilience. Specifically, it investigates the extent to which financial inclusion influences green investment adoption, identifies challenges faced by rural populations in accessing financial services for green projects and explores strategies to enhance financial inclusion effectiveness in supporting sustainability initiatives. It provides a detailed empirical analysis using data from 506 individuals randomly selected from rural areas in Nigeria, employing descriptive statistics, correlation, and regression analyses to evaluate the relationship between financial inclusion, income, education, age, and green investments. The findings reveal weak and statistically insignificant correlations between financial inclusion and green investments, indicating that financial inclusion alone is insufficient to drive substantial green initiatives in rural areas. Key barriers include a lack of tailored financial products, limited financial literacy, and structural challenges within rural financial systems. The study concludes that while financial inclusion is essential for economic participation, its potential to foster green investments requires complementary measures such as policy support, financial innovation, and enhanced awareness of green opportunities. It recommends the development of tailored financial products, promotion of financial literacy, and integration of environmental objectives into financial strategies to bridge the gap between financial inclusion and sustainable development in rural communities.

Keywords: Financial Inclusion, Green Investments, Rural, Sustainable Development

INTRODUCTION

The concept of financial inclusion has gained significant attention over the last few decades due to its potential to promote economic growth, alleviate poverty, and enhance social equity. Financial inclusion refers to the process of ensuring that individuals and businesses, particularly those in underserved and marginalized sectors, have access to useful and affordable financial products and services, including transactions, payments, savings, credit, and insurance (World Bank, 2022). In rural areas, financial inclusion plays a pivotal role in overcoming barriers such as geographical isolation, lack of infrastructure, and inadequate access to formal financial services (Demirgüç-Kunt et al., 2018). Recently, the focus has shifted toward examining how financial inclusion can influence environmental sustainability, specifically through fostering green investments. Green investments are those directed toward projects, initiatives, or assets that aim to preserve or restore environmental quality, reduce greenhouse gas emissions, and ensure the sustainable use of natural resources. These investments are critical in addressing climate change and achieving sustainable development goals (UNEP, 2021). In rural areas, green investment opportunities include renewable energy projects, sustainable agriculture, reforestation, and eco-tourism. However, the ability to implement such initiatives often depends on access to financial resources and services, which remain limited in many rural regions worldwide as reported by many authors.

The relationship between financial inclusion and green investments is particularly critical in rural areas of developing countries, where the impacts of climate change are often most severe. Rural households and businesses are highly dependent on natural resources, making them vulnerable to environmental degradation and climate-related risks (Ahmed et al., 2020). By facilitating access to financial resources, financial inclusion can enable these communities to invest in adaptive measures, such as irrigation systems, drought-resistant crops, or renewable energy sources. Furthermore, inclusive financial systems can promote resilience by offering insurance products that mitigate the economic impacts of climate-related disasters (Demirgüç-Kunt et al., 2022). Despite its potential, the integration of financial inclusion and green investments in rural areas faces several challenges. One significant issue is the lack of awareness and education about green investment opportunities. Rural populations often prioritize immediate economic needs over long-term sustainability goals, partly due to limited knowledge about the benefits of green practices (Matsumoto et al., 2019). Additionally, there is a mismatch between the design of financial products and the unique needs of rural communities. For example, loans for green investments may have terms that are unsuitable for smallholder farmers or rural entrepreneurs, such as high interest rates or short repayment periods (Klapper et al., 2016).

Policy interventions and innovative financial models are essential to address these challenges and maximize the impact of financial inclusion on green investments in rural areas. Governments, financial institutions, and non-governmental organizations (NGOs) have a role to play in creating an enabling environment for inclusive and sustainable finance. For instance, public-private partnerships can help develop tailored financial products for rural communities, such as low-interest loans for renewable energy projects or crop insurance linked to sustainable farming practices (Beck et al., 2020). Moreover, digital technologies, such as blockchain and mobile platforms, offer new opportunities to improve the efficiency and accessibility of financial services, thereby enhancing their potential to support green investments (Ghosh & Vinay, 2021). The broader implications of financial inclusion on green investments also intersect with gender dynamics and social equity. Women in rural areas, for example, are often disproportionately excluded from financial systems, despite their significant role in managing household resources and engaging in agricultural activities (Suri et al., 2022). By promoting gender-inclusive financial services, policymakers can enhance the participation of women in green investment initiatives, thereby amplifying the environmental and economic benefits of financial inclusion.

Furthermore, the transition to a green economy in rural areas requires not only financial inclusion but also a supportive policy framework and capacity-building efforts. Regulatory policies that incentivize green investments, such as tax breaks or subsidies for renewable energy projects, can complement financial inclusion initiatives. Capacity-building programs that provide training on sustainable practices and financial literacy are equally important in empowering rural communities to take full advantage of inclusive financial systems (UNDP, 2021). In conclusion, the interplay between financial inclusion and green investments in rural areas represents a critical area of inquiry with profound implications for sustainable development. Financial inclusion has the potential to unlock new opportunities for green investments, enabling rural communities to transition toward more sustainable livelihoods while addressing the challenges of climate change and environmental degradation. However, realizing this potential requires overcoming significant barriers related to access, awareness, and the design of financial products. By addressing these challenges through innovative policies and practices, stakeholders can harness the power of financial inclusion to drive environmental and social transformation in rural areas.

According to the IMF (2021), climate change is intensifying food insecurity across Sub-Saharan Africa (SSA) with lasting adverse effects on economic growth and poverty. In Nigeria, the count of people living on less than 1.90US dollars a day in rural regions from 2016-2022 reached 75 million; and throughout the period examined, the poverty incidence remained above 60 million in rural communities (Statistica 2023). The World Bank (2022) also reports that nearly 12% of the world population in extreme poverty lived in Nigeria with the majority in rural areas. The effects of climate change are severely felt by rural communities in developing economies. Climate change is a big risk and has the potential to further impoverish more rural population with adverse effects on rural livelihoods, quality of life and agricultural productivity.

Rural areas, particularly in developing countries, face significant challenges in achieving sustainable development due to limited access to financial services and the pervasive effects of environmental degradation. Financial inclusion, which aims to provide individuals and businesses with access to affordable and reliable financial services, has been identified as a critical tool for empowering marginalized communities and fostering economic growth (Demirgüç-Kunt et al., 2018). However, the extent to which financial inclusion can drive green investments defined as investments in sustainable and environmentally friendly practices remains inadequately explored in the context of rural areas. Green investments, such as renewable energy projects, sustainable agriculture, and reforestation initiatives, are essential for mitigating climate change and promoting long-term environmental sustainability. Yet, rural communities often lack the financial resources, technical knowledge, and institutional support required to undertake such investments (Ahmed et al., 2020). This creates a dual challenge: the need to enhance financial access and literacy while simultaneously promoting awareness and adoption of green practices as a shift toward green investments will help mitigate climate change with its adverse consequences.

While financial inclusion is often studied in terms of poverty reduction and economic empowerment, it’s potential to influence green investments remains underexplored. This research fills this gap by highlighting how financial products, such as bank account ownership, can enable rural households and enterprises to adopt environmentally friendly practices, such as renewable energy installations, sustainable agriculture, and waste management systems (Klapper et al., 2016). Understanding these dynamics is crucial for policymakers seeking to achieve the United Nations Sustainable Development Goals (SDGs), particularly SDG 7 (Affordable and Clean Energy), SDG 12 (Responsible Consumption and Production) and SDG 13 (Climate Action).

The study involved multiple stakeholders, including rural households and small businesses that are the primary beneficiaries of financial services, financial institutions (banks, microfinance organizations, and digital platforms) providing access to financial products, and policymakers who shape the regulatory environment from across Nigeria surveyed by the NBS/EFInA in 2021. key areas: bank account ownership, educational background, age and income level.

The study addresses the dual challenge of financial exclusion and environmental sustainability, which are critical for rural development. Rural areas often face limited access to financial services, which restricts the ability of individuals and businesses to invest in green technologies and sustainable practices (Demirgüç-Kunt et al., 2018). By exploring how financial inclusion can enhance access to credit and other financial tools, this study sheds light on mechanisms that can drive green investments and foster economic growth in underserved communities. Against this background, paper seeks to assess the impact of financial inclusion on green investments in rural areas of Nigeria, focusing on how access to financial services can promote environmentally sustainable practices and economic resilience.

The structure of the remaining part of the paper is as follows: Section 2 reviews existing literature concerning financial inclusion and green investments; Section 3 discusses the methodology employed; Section 4 explains the empirical analysis and discussion of results, and Section 5 discusses the conclusion and recommendations.

The following hypotheses will be tested to achieve the objective of the paper:

H₀₁: There is no significant impact of financial inclusion on green investments in rural areas of Nigeria

LITERATURE REVIEW

Conceptual Review

This section reviews both empirical concepts, theoretical, empirical literature linking financial inclusion with green investments.

Financial inclusion

Financial Inclusion refers to the availability and accessibility of financial services to all individuals, particularly those in underserved or marginalized communities. Financial inclusion is defined as the process of ensuring that individuals and businesses, particularly in disadvantaged and rural areas, have access to affordable financial products and services. This includes savings accounts, credit, insurance, and payment systems (World Bank, 2018). Access to financial services is essential for economic participation, enabling people to save, invest, and protect themselves from financial risks. In rural areas, where populations are often excluded from formal financial systems, financial inclusion is seen as a pathway out of poverty and a tool for sustainable development (Beck et al., 2007).

Green investments

Green investments refer to the financial support and capital directed toward projects and activities that contribute to environmental sustainability. This includes investments in renewable energy, sustainable agriculture, eco-friendly infrastructure, and projects that reduce carbon emissions and promote environmental conservation (OECD, 2017). Green investment is critical in mitigating the effects of climate change, conserving natural resources, and fostering long-term economic growth in a sustainable manner. In rural areas, green investments are essential for transitioning towards more sustainable agricultural practices, improving energy access through renewable energy sources, and enhancing the resilience of rural communities to climate change. Agriculture, a primary economic activity in rural areas, is highly vulnerable to the impacts of climate change, including extreme weather events, water scarcity, and soil degradation. Green investments can enable farmers to adopt climate-smart agricultural practices, access renewable energy for irrigation and cooling, and invest in sustainable land management (FAO, 2020).

The necessity of green investments is also emphasized in the context of achieving global environmental goals, such as those outlined in the United Nations Sustainable Development Goals (SDGs), particularly SDG 7 (Affordable and Clean Energy), SDG 12 (Responsible Consumption and Production) and SDG 13 (Climate Action). Rural areas play a critical role in meeting these goals, given their dependence on natural resources and their potential to implement sustainable practices. Therefore, green investment is not only crucial for environmental sustainability but also for economic resilience and poverty reduction in rural communities.

The relationship between financial inclusion and green investment is conceptualized through the lens of financial services as a means to access capital, manage risk and foster innovation in green technologies. Financial inclusion provides rural populations with the tools needed to engage in green investment opportunities by facilitating access to credit, insurance, and savings mechanisms. The availability of financial products tailored to the specific needs of rural areas can directly impact the adoption of green technologies and sustainable practices (Buchanan & Venkatraman 2016).

The relationship between financial inclusion and green investments in rural areas is a growing area of research, particularly as global attention turns to sustainable development and environmental preservation. This theoretical literature review explores the key theoretical frameworks and concepts that have been used to understand how financial inclusion can facilitate green investments in rural areas. These theories are drawn from the fields of financial inclusion, sustainable development and environmental economics and they provide a basis for understanding how access to financial services can drive green investment in rural communities.

Theoretical Literature

Financial Intermediation Theory

Financial Intermediation theory posits that financial institutions act as intermediaries between savers and borrowers, facilitating the flow of capital into productive investments. This theory underlines the critical role of banks, microfinance institutions, and other financial entities in providing capital for investments. In rural areas, financial intermediaries often face barriers in providing services due to geographical, social, and economic challenges. However, by offering access to financial products such as loans, insurance, and savings, financial intermediaries can enable rural populations to invest in green projects, such as renewable energy systems, sustainable agriculture, and eco-friendly infrastructure (Diamond, 1984). Financial inclusion, in this context, refers to the extent to which rural communities can access financial products that enable investment in environmentally sustainable projects. In regions where traditional banking infrastructure is lacking, mobile banking and digital financial services have emerged as tools to overcome these barriers, allowing individuals and businesses to engage in green investments that contribute to long-term economic and environmental resilience (Beck et al., 2007).

Empirical Review     

The empirical literature reviewed demonstrates that financial inclusion has a significant positive impact on green investments in rural areas. Studies from various regions, including Sub-Saharan Africa, India, Brazil, Indonesia, and Nigeria, show that access to financial services such as microloans, insurance, and digital banking can help rural communities overcome capital constraints, enabling them to invest in sustainable technologies and practices. These investments not only enhance economic development but also contribute to environmental sustainability, thereby aligning with global objectives of climate change mitigation and resilience in rural areas.

Jack and Suri (2011) employed natural experiments, regression models, instrumental variable techniques and descriptive analysis to draw strong conclusions about the causal relationship between mobile money and the adoption of solar energy. Their study specifically focused on the use of mobile money platforms, such as M-Pesa in Kenya, to enable rural populations to invest in solar energy systems. They found that mobile money significantly increased access to financial services, allowing households in rural areas to invest in clean energy solutions like solar energy. The study concludes that mobile financial services create an accessible route for green investments, contributing to both economic and environmental sustainability in rural African regions.

Araujo and Rodrigues (2020) used a quantitative methodology combining regression analysis, instrumental variable techniques and descriptive statistics to examine how financial inclusion influences the adoption of green investments in Brazil. Their research highlighted that access to financial services, including green loans and government-backed grants, allowed rural communities to invest in renewable energy solutions, sustainable farming, and eco-tourism initiatives. The study found that rural financial inclusion programs facilitated the adoption of eco-friendly technologies and practices by providing the capital needed for green investments, thereby contributing to both economic development and environmental sustainability in Brazil’s rural areas.

Kariuki et al. (2021) investigated the effect of financial inclusion on the adoption of green agricultural practices in rural Kenya. The methodology employed involved a combination of quantitative and qualitative research techniques including surveys, regression analysis and case studies.  Their study found that farmers with access to financial services such as savings accounts, microloans, and insurance were more likely to invest in sustainable farming techniques, including agroforestry, organic farming, and water-saving irrigation technologies. The research suggests that financial inclusion helps mitigate the financial barriers to adopting climate-smart agricultural practices, which are vital for improving food security and environmental sustainability in rural Kenya.

Wulandari and Hariyanto (2021) employed a quantitative approach combining survey data, regression analysis and financial inclusion indicators to assess the relationship between financial inclusion and the adoption of green energy investments. They examined how financial inclusion impacts investments in green energy in rural Indonesia. The study found that access to microfinance and digital financial services facilitated investments in renewable energy sources such as solar panels and mini-hydro plants. Financial products tailored to rural areas, including green loans and flexible repayment options, enabled farmers and small businesses to adopt green energy solutions. The findings suggest that expanding financial inclusion in rural Indonesia can enhance the adoption of sustainable energy technologies and reduce reliance on non-renewable energy sources.

Ogunleye and Adebayo (2022) combined structured surveys, regression analysis and instrumental variables to explore how financial inclusion affects the adoption of green investments in rural Nigeria. They explored the impact of financial inclusion on green investments in rural Nigeria. The study highlighted that financial inclusion programs, such as micro-loans and insurance products, were key in enabling rural communities to invest in sustainable agricultural practices and renewable energy technologies. The research indicated that financial services such as digital banking and mobile money platforms played a significant role in overcoming geographical and infrastructural barriers, allowing rural households to make investments in green technologies that promote environmental sustainability and economic resilience.

Significance of the Study

While existing literature highlights the positive relationship between financial inclusion and green investments in rural areas, several gaps remain in understanding the full scope of this impact. One significant gap is the lack of long-term studies. Many studies focus on short-term impacts, failing to capture the sustainability and long-term benefits of green investments facilitated by financial inclusion. Longitudinal studies could provide a better understanding of the enduring effects of financial inclusion on green investments, particularly how these investments contribute to climate resilience and long-term economic stability in rural areas. Addressing these gaps would offer a more comprehensive understanding of how financial inclusion can effectively drive green investments in rural areas, helping policymakers design more targeted and impactful strategies.

METHODOLOGY

Theoretical Framework

The theoretical framework for this study is from the theory of inclusive growth that integrates economic growth with social and environmental sustainability. Inclusive growth emphasizes the importance of ensuring that growth benefits all segments of society, particularly marginalized or vulnerable groups, such as rural populations (World Bank, 2013). Financial inclusion is central to this theory, as it allows for the creation of economic opportunities that are accessible to all, regardless of income level or geographic location. In the context of green investment, inclusive growth theory posits that fostering financial inclusion in rural areas can lead to the widespread adoption of green technologies and practices, thus contributing to both economic development and environmental sustainability. Inclusive growth theory suggests that when financial systems are designed to serve the rural poor, they can help create a more equitable distribution of the benefits of green investments, such as clean energy or sustainable farming. In this way, financial inclusion is not just about improving access to financial products; it is about creating opportunities for rural populations to participate in green investment initiatives that can improve their long-term well-being while also addressing climate change.

Sources and Nature of Data

The study adopts the ex post facto research design which is a very common and ideal method in conducting research in business and social sciences. It is mostly used where variables are drawn from already concluded events and there is no possibility of data manipulation.

The study used secondary data collected from the National Bureau of Statistics (NBS) Survey report 2021/EFInA Survey Report 2021.

Model Specification

The study adopts the multiple regression model with robust standard errors to account for spatial heterogeneity in data as seen in Wulandari and Hariyanto (2021) and Ogunleye and Adebayo (2022). The dependent variable (Y): Green Investments (e.g renewable energy, sustainable agriculture) and the independent variables: Financial Inclusion (e.g bank account ownership); Household income, education and age). Multiple regression analysis was used to explore the predictive power of financial inclusion factors (e.g., bank account, access to credit, mobile banking) on the adoption of green investment practices. This can help identify which aspects of financial inclusion have the strongest impact on green investments.

The statistical equation for the study is given as:

GI = 𝛽 ₀ + 𝛽₁FI + 𝛽₂INC + 𝛽₃EDU + 𝛽₄AGE+ ε

Where;

– GI = Green Investment

– FI = Financial Inclusion

– INC = Income (control variable)

– EDU = Education (control variable)

– AGE = Age (control variable)

– β0 = Intercept or constant term

– β1-β4 = Coefficients of the independent variables

– ε = Error term

Method of Analysis

The study focused on 506 individuals randomly selected from rural areas in Nigeria, across the six Geo-political zones and extracted from NBS report 2021 by the researcher. The study involved multiple stakeholders, including rural households and small businesses that are the primary beneficiaries of financial services, financial institutions (banks, microfinance organizations, and digital platforms) from across Nigeria surveyed by the NBS/EFInA in 2021.

Basic statistical analysis was performed to summarize the demographic characteristics of the sample and provide an overview of the current state of financial inclusion and green investments in rural areas. To examine the relationship between financial inclusion (independent variable) and the level of green investments (dependent variable), Pearson’s correlation coefficient was applied.

Empirical Analysis and Discussion of Results

Pre-estimation tests

Pre-estimation tests were conducted to ensure the validity and reliability of the model and its underlying assumptions. The key tests performed include normality, multicollinearity, and heteroscedasticity tests (See Table 1). The normality of the residuals was assessed using the Shapiro-Wilk test. The test yielded a p-value greater than 0.05, indicating that the residuals follow a normal distribution. The assumption of normality was satisfied, supporting the appropriateness of linear regression for the dataset.

Multicollinearity among the independent variables (financial inclusion, income, education, and age) was evaluated using the Variance Inflation Factor (VIF). All variables had VIF values below 10, with most around 1-2, indicating the absence of multicollinearity. The predictors were independent, ensuring the stability and interpretability of the regression coefficients.

Table 1: Pre-estimation Test

Source: Authors Computation, (2025)

Descriptive Statistics

Descriptive statistics provides a summarized view of the data, allowing for an initial understanding of the dataset. Table 2 provides a summary of the main variables analyzed, including Financial Inclusion (FI), Income (INC), Education (EDU) and Age (AGE). FI ranges from 0.74% to 99.92%, with a mean of 48.46% and a standard deviation of 29.03%. Household income ranges from ₦113,216 to ₦1,995,369, with a mean income of ₦1,060,720.42 and a standard deviation of ₦556,388.76. Level of Education ranges from 0.12% to 99.60%, with a mean of 48.92% and a standard deviation of 28.65%. Age in years ranges from 20 to 80 years, with a mean age of 50.65 years and a standard deviation of 17.65. The descriptive statistics shows that the impact of financial inclusion (FI) on green investments (GI) in rural areas of Nigeria appears to be minimal. While financial inclusion is a critical factor in improving economic participation, its direct impact on green investments in rural Nigeria is weak. This underscores the need for complementary measures, such as targeted education campaigns, subsidies for green projects, or financial instruments explicitly designed to encourage green investments.

Table 2: Descriptive Statistics

Source: Authors computation, (2025)

The Correlation Analysis

The correlation analysis examined the strength and direction of the relationships between Green Investment (GI) and the other variables, including Financial Inclusion (FI), Income (INC), Education (EDU), and Age (AGE). A correlation coefficient of -0.023 indicated that there is a very weak negative correlation between GI and FI, indicating that higher financial inclusion slightly correlates with lower green investments. However, this relationship is negligible and not statistically significant. The correlation between GI and income is weakly positive (0.021), suggesting that individuals with higher incomes are marginally more likely to participate in green investments. However, the relationship is too weak to draw meaningful conclusions. A weak negative correlation (-0.043) exists between GI and education, suggesting that higher levels of education do not necessarily lead to greater green investments. This unexpected result might reflect other confounding factors; such as lack of awareness or accessibility to green investment options. There is a weak negative correlation (-0.005) between GI and age, indicating no meaningful relationship between an individual’s age and their likelihood of engaging in green investments. The correlation results highlight weak and non-significant relationships between Green Investments (GI) and the independent variables. These findings suggest that none of the tested variables (FI, INC, EDU, AGE) strongly influence green investments. Other external or structural factors may play a more critical role in determining green investment behavior.

Table 3 shows that all p-values are above 0.05, suggesting no statistically significant correlations.

Source: Authors computation, (2025)

The Regression Analysis

The regression analysis conducted sought to explain the influence of Financial Inclusion (FI), Income (INC), Education (EDU), and Age (AGE) on Green Investments (GI). The model summary highlights that the selected variables (FI, INC, EDU, AGE) have minimal explanatory power for Green Investments (GI). This weak performance suggests the need for additional or alternative variables to better understand the factors influencing GI in rural areas in Nigeria. The explanatory power of financial inclusion and related variables for green investments is limited, as indicated by low R-squared values and insignificant coefficients. This suggests that other factors, not included in the study, might be more influential in driving green investments.

Table 4: Model Summary

Source: Authors computation, (2025)

Table 5: ANOVA Table

Source: Authors computation, (2025)

Table 4 shows that there is a lack of statistical significance (p-value = 0.827), and this suggests that financial inclusion, in this model, is not a strong driver of green investments in rural areas in Nigeria. The model as a whole also does not explain much of the variation in green investments as indicated by the high p-value of the F-statistic (See Table 5). This analysis indicates that other factors may play a more significant role in influencing green investments or the model itself may need further refinement to capture the relationships more effectively.

Table 6: Coefficients Table

Source: Authors computation, (2025)

Table 6 shows that financial inclusion (FI) does not have a statistically significant effect on green investments (GI) in rural Nigeria, as evidenced by the high p-value of 0.619. This suggests that other factors not included in the model may be more influential in driving green investments. The same applies to income, education and age, which also do not show significant effects in this particular model

The explanatory power of financial inclusion and related variables for green investments is limited, as indicated by low R-squared values and insignificant coefficients. This suggests that other factors, not included in the study, might be more influential in driving green investments.

DISCUSSION OF FINDINGS

The paper focuses on examining the impact of financial inclusion on green investments in rural areas of Nigeria, with the aim of assessing how access to financial services can promote environmentally sustainable practices and economic resilience. The study made the following findings. The study reveals weak and statistically insignificant correlations between financial inclusion and green investments, indicating that financial inclusion alone is insufficient to drive substantial green initiatives in rural areas. The study also found that financial inclusion does not have significant impact on green investments in rural areas in Nigeria.

Table 6 shows that financial inclusion (FI) does not have a statistically significant effect on green investments (GI) in rural Nigeria, as evidenced by the high p-value of 0.619.

The correlation results in Table 3 also found weak and non-significant relationships between Green Investments (GI) and the independent variables. These findings suggest that none of the tested variables (FI, INC, EDU, AGE) strongly influence green investments. This suggests that other factors not included in the model may be more influential in driving green investments.

The outcome of this result was supported by the results of Ogunleye & Ogbonna (2020), in a study on financial inclusion and rural development in Nigeria, also found weak evidence linking financial inclusion directly to environmental investments and the result of Demirguc-Kunt et al. (2018), in their work on the relationship between financial inclusion and economic growth, found that financial inclusion alone does not guarantee specific outcomes like green investments, suggesting that additional conditions—such as awareness, infrastructure, and policy—are needed for such investments to thrive. Also Schoar (2010), in the study of the effect of financial inclusion on economic outcomes, reported the limited impact of financial inclusion on broader economic outcomes when there is a lack of other enabling factors, such as supportive regulatory frameworks or education on sustainability practices.

CONCLUSION AND RECOMMENDATION

Conclusion

The analysis reveals that while financial inclusion is essential for economic participation, its direct effect on fostering green investments in rural Nigeria is negligible. This outcome highlights systemic challenges such as a lack of tailored financial products, limited awareness of green investment opportunities, and structural barriers in rural financial systems. Current financial inclusion initiatives are insufficient to drive substantial green investments in rural areas.

Recommendation

Therefore, the following recommendations were raised from the research findings:

1. There is a critical need for innovative strategies to integrate environmental sustainability into financial inclusion frameworks and broader socio-economic and policy-level factors must be considered to enhance the effectiveness of financial inclusion in promoting green investments. The research underscores the need for targeted interventions and complementary measures to strengthen the link between financial inclusion and green investment.
2. Develop Tailored Financial Products: Design low-interest loans, insurance, and savings instruments explicitly aimed at supporting green investments. Introduce flexible repayment schemes suitable for rural populations engaged in environmentally sustainable projects.
3. Enhance Financial Literacy and Awareness: Implement training programs focusing on green investment benefits and processes. Use community outreach and digital platforms to disseminate information.

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