FINANCIAL INCLUSION: A PANACEA FOR POVERTY ALLEVIATION IN NIGERIA

Abstract

Financial inclusion is an open strategy for the reduction of poverty and acceleration of inclusion growth. This study aimed to determine the effect of financial inclusion on poverty alleviation in Nigeria. The study used serial annual and secondary data gotten from the Central Bank of Nigeria, statistical bulletin, and annual reports, for the period 2005-2019. To avoid spurious regression due to the problem of non-stationarity of data, the Augmented Dickey-Fuller test was used to check for the presence of a unit root in the variables, while cointegration test was used to check the long-run relationship among the variables in the model and was carried out using the Johansen technique. The model was logged in order to checkmate the presence of heteroscedasticity. The study used ordinary least square (OLS) regression analysis. The Distributed-Lag (D-L) model was incorporated into the OLS because the effect of financial inclusion may take a little time to manifest in the individual economic welfare thus creating room for lag. Financial inclusion was measured by the number of commercial bank branches (CBB), number of microfinance bank branches (MfBB), number of ATM points (ATM), and credit to rural area (CRA) and poverty was measure by per capita income (PCI).From the result, none of the measures of financial inclusion considered in this study play a significant role to reduce poverty in Nigeria within the period studied. The numbers of microfinance bank branches and credit to rural areas have a positive effect on poverty reduction in Nigeria. Though, the number of microfinance bank branches and credit to rural areas was not significant it was recommended that policy managers should create room for more credit facilities to the rural areas and more micro finance bank branches should be open in the rural areas.