An Empirical Investigation of Financial Inclusion, Poverty and Inequality in Nigeria

Abstract

The problem of poverty and inequality is a great challenge that has faced the world at large, especially developing countries like Nigeria. There have been several reforms which have led to minimal or no impact in reducing this problem. However, after the recession in 2008, financial inclusion as a policy was seen as a tool that could significantly increase growth, reduce poverty and inequality. Thereby, this study intends to examine three measures of financial inclusion and its effect in reducing poverty and inequality in Nigeria using the Vector Autoregressive model (VAR) and quarterly data from 2004 to 2018. The result revealed an insignificant relationship between all financial inclusion measures and poverty reduction. However, the domestic credit by banks to the private sector had a significant long-run relationship with inequality in Nigeria. Lastly, institutional quality and inflation had no impact on poverty and reducing inequality in Nigeria. Thus, it is recommended that government should undertake policy interventions that would be targeted towards providing accessible and easy to use financial services to the poor. This would go a long way to reduce poverty and inequality in Nigeria