FINANCIAL INCLUSION AND ECONOMIC GROWTH IN NIGERIA

Abstract

This study examined the effect of financial inclusion on economic growth in Nigeria, spanning the period 1986 to 2023. An ex-post facto research design was employed to investigate variables such as credit to the private sector, interest rate and inflation as indicator variables for financial inclusion against economic growth. Using Augmented Dickey-Fuller unit root test. The results revealed a mixed order of integration, which justifies the use of the ARDL bounds testing approach. The findings of this study suggested that financial inclusion variables exerted a strong and statistically significant positive effect on economic growth in Nigeria, both in the short run and in the long run. Conversely, the evidence suggested that credit to the private sector, interest rates, and inflation do not exert long-run influence. We recommended that financial sector regulators should adopt incentive mechanisms to encourage banks to establish more branches in areas with low financial penetration prioritizing literacy campaigns to equip citizens with the knowledge of inflation and interest rate. In addition, fostering innovation through financial technology can complement traditional banking by offering low-cost, scalable financial solutions that extend the reach of financial services and reduce the burden of physical infrastructure expansion.