Financial Inclusion and Economic Growth in Ngeria

Despite all the desirable reforms undertaken in the Nigerian financial sector, economic growth has remained unstable and lower than its potential, given that an enormous percentage of Nigerians are yet to be financially included, and this has limited economic growth through savings mobilization and credit allocation to different sectors of the economy. As such, this study investigates how financial inclusion impacts economic growth in Nigeria through its analysis of annual data that covers the period from 1986 to 2023. The data from World Bank and Central Bank of Nigeria and National Bureau of Statistics were used and the Vector Error Correction Model (VECM) method applied for model parameter estimation. From the findings, there existed significant positive impacts of financial technology, broad money supply, capital expenditure on transport/communication on economic growth. Although institutional quality had a negative but significant effect on economic growth, financial inclusion had a positive but insignificant effect on economic growth in Nigeria. Based on these findings, it is recommended that Nigeria focuses more on strengthening its digital financial system, better governance to strengthen its institutions, accessing more formal channels of financial services, and adapting better public investment strategies towards inclusive economic growth.