EFFECT OF FINANCIAL INCLUSION ON ECONOMIC DEVELOPMENT IN NIGERIA

Abstract

Objective: The objective of this study is to investigate the effect of financial inclusion on economic development in Nigeria, with the aim of analysing the interplay between the two variables through a review of relevant literature and empirical evidence. Theoretical Framework: The finance-growth theory posits that development of financial systems cultivates an environment conducive to growth, operating through demand-following mechanism. This theory provides a solid basis for understanding the context of the investigation. Method: Financial inclusion was proxied through money supply, which represents the size of the banking sector, while credit to the private sector measures the size and financial depth of the banking sector. Data were sourced from the Central Bank of Nigeria Statistical Bulletins and the World Development Indicators. Results and Discussion: The findings indicate both short-term and long-term relationships between financial inclusion and economic growth, aligning with the theoretical framework. The implications and relationships identified are discussed within this context, including potential discrepancies and study limitations. Research Implications: The practical and theoretical implications of this research are discussed, providing how the results can be applied or influence practices in the field of financial management. These implications could encompass inclusive economic growth and sustainable development. Originality/Value: This study contributes to the literature by highlighting the need to design and implement interventions that promote financial inclusion while addressing the specific needs of diverse demographics. The relevance and value of this research are evidenced by its emphasis on advancing financial inclusion as a catalyst for driving economic development in Nigeria.