Economic analysis of financial inclusion in Nigeria

Cornelius Unokhoghie, BSc

Master's thesis

Abstract:

Recent years have seen a greater emphasis placed on the value and advantages of an economy's optimal financial inclusion. The ability to use formal financial services helps reduce extreme poverty, promote inclusive and sustainable development, and increase share prosperity. However, despite the perceived benefits accruing from optimal financial inclusion in an economy. Many people are still unbanked, especially in sub-Saharan Africa. Therefore, the purpose of this study is to investigate the main drivers of financial inclusion, reasons Nigerians are reluctant to possess bank accounts in Nigeria, why Nigerians seek credit from financial institutions, and reasons why such requests are denied. This study adopted the time series regression estimation technique to test financial inclusion’s influence. Secondary Data were sourced from the World Development Indicator website for the identified variables and were tested subsequently. It was concluded that none of the variables were stationed at I(2). Because of that, dynamic ordinary least square was appropriate for the study. GDP, level of education, urbanization rate, mobile phone penetration, and gender inequality had a significant effect on financial inclusion. Also, the study found that easy access, individual factors, and minimum balance had a significant effect on individual reluctance in opening an account. Also, the study found that interest rate, poverty, and level of education have a significant effect on credit from banks. Also, the study found that bank non-performing loans, inflation, and interest rate of treasury bills had a positive and significant effect on credit decline from financial institutions. The study recommended that more financial institutions, such as microfinance, savings and loans firms, and rural banks, should be formed in Nigeria's urban and rural areas to engage more families in the financial sector. This will allow households to have access to funds to engage in productive endeavors, which will result in better household social welfare.

Keywords

Financial Inclusion, Financial Intermediation, economic growth, Banking reforms, financial literacy, Unbanked, banked, fintech

Jazyk práce: English

Datum vytvoření / odevzdání či podání práce: 3. 4. 2023

Obhajoba závěrečné práce

• Obhajoba proběhla 26. 5. 2023
• Vedúci: Ing. Karel Malec, Ph.D.
• Oponent: Jana Skřivánková, B.E., externi

Czech University of Life Sciences Prague

Faculty of Economics and Management

Master programme:
Economics and Management