Abstract
Financial inclusion has become a policy issue and a veritable tool for poverty reduction and the economic growth. This study aims to investigate how so far financial inclusion has benefited the banking sector and its challenges in Nigeria. Data for the study were collected mainly from secondary sources; such as Statistical Bulletins of the Central Bank of Nigeria (C.B.N.) and the National Bureau of Statistics. Data relates to the first and second elements of financial deepening (FDI and FD2), Liquidity ratio (LQR), Loan-to-deposit ratio (LDR), and Gross Domestic Product (GDP) covering a period from 1988 to 2017. The obtained data were analysed using the Ordinary Least Square (OLS) method facilitated with E-views 8 Econometric Software. The result showed that the first and second elements of financial deepening (FDI1 and FD2), and Liquidity ratio (LQR) all have a positive impact on the nation’s economic growth whereas Loan-to-deposit ratio (LDR) does not. Assessment of the first element of financial deepening (FD1) is however insignificant. Also, the extent of the relationship between the dependent and independent variables is very good (about 96%) although a case of autocorrelation is unavoidably present. Again the F- statistic shows a statistical significant relationship hence the null hypothesis is rejected. In conclusion, the study recommended the need to create deposit and borrowing windows at affordable cost to the poor and to the income group erstwhile tagged the ‘not bankable’, financial awareness should be well tailored in all local languages and across suitable platforms, among others. Keywords : Financial Inclusion, Commercial banks, GDP, Liquidity Ratio, Loan-to-Deposit Ratio DOI : 10.7176/EJBM/11-20-06 Publication date :July 31 st 2019
Highlights
Financial inclusion is the practice that ensures the accessibility, availability and usage of formal financial system to all fragments of a population (Onaolapo, 2015)
This study has examined the effects of financial inclusion on the Nigerian economic growth; findings from the empirical results indicate relationship between financial inclusions in Nigeria, economic growth over the thirty (30) years period of study
Empirical finding that examines the relationship between financial inclusion and economic growth in Nigeria indicates that there is a significant relationship between financial inclusion and economic growth in Nigeria in the period under study (giving Prob. (F-Stat) is 0.000000 as against F-Stat 159.3267)
Summary
Financial inclusion is the practice that ensures the accessibility, availability and usage of formal financial system to all fragments of a population (Onaolapo, 2015). Access to financial services by these hundreds of millions of men and women (all over the world) who are presently excluded would provide the possibilities for the creation of a large depository of savings, investable funds, investment and global wealth creation. This implies that, access to customized and bespoke financial services for low-income earners will promote enormous capital accumulation, credit creation and investment boom, which will provide a massive source of cheap long-term investable capital
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