The Nexus between Financial Inclusion and Economic Growth: Evidence from Nigeria

International Journal of Research and Innovation in Social Science (IJRISS) | Volume II, Issue IV, April 2018 | ISSN 2454-6186

The Nexus between Financial Inclusion and Economic Growth: Evidence from Nigeria

Michael Chukwunaekwu Nwafor¹, Aremu Israel Yomi²

¹Department of Accounting and Finance, Godfrey Okoye University Enugu, Nigeria
²Department of Accountancy, University of Nigeria Nsukka, Nigeria

Abstract: – This research work focused on the relationship between financial inclusion and economic growth in Nigeria. Two hypotheses were formulated, corresponding data (spanning from 2001 to 2016) were obtained and tested using Two-staged Least Squares Regression Method. Findings revealed that financial inclusion have significant impact on economic groowth in Nigeria and that financial industry intermediation have not influenced financial inclusion within the period under review. It was recommended that Nigerian banks should develop financial products to reach the financially excluded regions of the country as this will increase GDP per capital of Nigeria and consequently economic growth.

Keywords: Financial Inclusion; Economic Growth; Financial Intermediation;

I. INTRODUCTION

Financial access is a very vital tool which government uses in stimulating economic growth because of its ability to expedite efficient allocation of productive resources, thus reducing the cost of capital. This practise can also be referred to as an inclusive financing system as it to a great level improves the daily activities pertaining to management of finances, and as well as reduces the growth of non-formal sources of credit (such as money lenders), which are often found to be manipulative or exploitative (Onaolapo, 2015). In recent times, Financial inclusion has assumed greater level of importance owing to its apparent prominence as a driver of economic growth. Financial inclusion is a situation where financial services are provided by arange of providers, mostly the private sector, to spread to everyone who coulduse them. Precisely, it means a financial system that serves as many 5people as possible in a country. Financial inclusion is also perceived as the delivery of financial services at affordable costs to some disadvantages and low income segment of the economy (Harley, Adegoke and Adegbola, 2017). In recent times, financial Inclusion has assumed acritical development policy priority in many countries, particularly in developing economies (Sharma, 2015).

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