An Analysis of Financial Inclusion and Economic Growth in Nigeria; An ARDL Approach

International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue X, October 2020 | ISSN 2454–6186

An Analysis of Financial Inclusion and Economic Growth in Nigeria; An ARDL Approach

    Kenechukwu J. Nwisienyi¹, Onyeka A. Obi^{2
1, 2}School of Financial Studies, Department of Banking and Finance, Federal Polytechnic Oko Anambra State, Nigeria 

Abstract—The study investigated the relationship between financial inclusion and the Nigerian economic growth using an annual time series data for the periods 2004 to 2018. The Auto Regressive Distributive Lag bounds test for cointegration and Error Correction model was applied to examine the long run relationship of the variables. The result showed that there is cointegration amongst the variables. The Number of ATMs per 100,000 adults was found to be positively and significantly correlated with economic growth while borrowers from commercial banks per 1000 adults and lending interest rates were significantly negative to economic growth. The study found depositors with banks per 1000 adults to be insignificant. The study recommends, amongst other things, that effective campaign or awareness should be made to increase financial literacy and/or awareness. Again, transaction costs and financial obligations attached to using financial services or products should be reviewed downwards to accommodate the proportion of the population that is poor.

Keywords— Financial Inclusion, Economic Growth, Financial Access, Financial Exclusion, Cashless Policy.

I. INTRODUCTION

The importance of financial inclusion cannot be over-emphasized. This is evident in the global efforts to perpetuate financial access and indeed financial deepening amongst economically active adults especially in the rural areas. [27] said that the issue of access to financial services for the rural dwellers in every country in terms of development, poverty reduction, decent work and economic empowerment has received growing attention from scholars and policy makers as it concerns financial inclusion. Its potency in encouraging economic growth is undeniable as it is portrayed in global policy spheres [22]. [8] noted that a well-suited financial inclusion for low-income earners promote enormous capital accumulation, credit creation and investment boom. Its far reaching economic and social implications are very obvious and has become a critical area of concern for every policymaker. The adoption of several policies and measures globally aimed at growing financial inclusion as a means of promoting world economic prosperity, gives credence to the afore-mentioned.

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