MICROFINANCE BANKS ACTIVITIES AND ECONOMIC DEVELOPMENT OF NIGERIA

Abstract

This study investigated the effect of microfinance banks on economic development of Nigeria from (1992-2021) using secondary data from Statistical bulletin of Central Bank of Nigeria and United Nations Development Programme (UNDP) annual report. The research work used the fully modified ordinary least square (FMOLS) regression analysis to test the effect between the independent variables (Microfinance Banks Loans and Credit, Investments and Deposits, Government Expenditure on Education and health) on the dependent variable (human development index). The study discovered that microfinance bank activities had a significant effect on Nigeria's human development index during the study period. Therefore, the study recommends that, microfinance banks should direct their loans to the productive sector in order to create more jobs and improve Nigeria's economic development. In addition, microfinance institutions should assist those who do not have access to traditional banking services in gaining access to their credit facilities. Microfinance institutions should incorporate training and capacity-building programs into their services. They should also contribute to women's empowerment, which will increase women's access to education and health care.