Financial Inclusion Variables and Domestic Economy: Nigeria in Perspective (2006 -2019)

Abstract

The study estimated the impact of selected financial inclusion variables on Nigeria’s economy for the period 2006 – 2018. The variables selected include: access to bank credit; number of bank branches; number of automated teller machines/mobile bank users and point of sale (POS). The study adopted the pre and post estimation technique using ADF and Pesaran and Shin method of cointegration to determine the order of integration and to determine whether there is a long run relationship existing between the variables.  The ARDL estimation was conducted to obtain the long and short run coefficients of the variables under consideration. On the basis of the result, it was found that access to bank credit has significant positive relationship with GDP growth in Nigeria. The study further concludes that GDP growth has a strong positive relationship with the branch network as well as the number of ATM/ mobile money users/accounts while the relationship between GDP growth and number of POS is a weak positive and the relationship between economic growth. Specifically, one billion naira increase in bank credit resulted to about six billion units increase in total output of Nigeria. Similarly, the increase in the number of ATM/Mobile money users brought about the increase in the growth of GDP by about 16 billion units. Furthermore, the increase in the number of bank branches in Nigeria by one resulted to increase in GDP growth by about 3.7 units. However, the increase in the number of POS has not impacted on the country’s GDP. The study recommended that the government should encourage the banks to further increase the number of POS so as to strengthen the ease of financial access to all bankable persons. Also, the ATM should also serve as credit cards to further increase credit access of bank customers.