MODELING THE IMPACT OF FINANCIAL INCLUSION ON POVERTY REDUCTION IN NIGERIA

Abstract

Financial inclusion is a critical driver of economic development, particularly useful in tackling poverty by providing basic financial services to marginalized segments of the population. Thus, the objective of the study is to empirically investigate the impact of financial inclusion on poverty reduction in Nigeria for the period 1987 to 2022. To achieve the study objective, time series data were collected from the publications of Central Bank of Nigeria, National Bureau of Statistics and World Development Indicators of the World Bank data. The Ordinary Least Squares regression technique was used to estimate the variables coefficient. The findings revealed that the various financial inclusion measures notably Bank branches, Bank loan and advances, and Micro, Small and Medium Enterprise Development Fund exert positive impact on poverty reduction in the study period. Our study also shows that number of Point of Sale and Demand Deposits in the rural areas produce statistically significant negative effect on poverty reduction. The study therefore concludes that Bank branches, Bank loan and advances, and Micro, Small and Medium Enterprises Development Fund contribute to poverty reduction, while Point of Sale and Deposit from rural areas did not. Hence, we suggest income policies that drive savings in the economy such as equitable distribution of income that made financial inclusion pro-poor in Nigeria. The study recommends moderation in the application of monetary policies so that individuals and businesses can have access to affordable credit for poverty reduction purposes.