Journal of Finance and Economics
ISSN (Print): 2328-7284 ISSN (Online): 2328-7276 Website: http://www.sciepub.com/journal/jfe Editor-in-chief: Suman Banerjee
Open Access
Journal Browser
Go
Journal of Finance and Economics. 2018, 6(1), 19-25
DOI: 10.12691/jfe-6-1-3
Open AccessArticle

Empirical Analysis of the Determinants of Financial Inclusion in Nigeria: 1990 - 2016

Okoroafor O. K. David1, , Adeniji Sesan Oluseyi1 and Awe Emmanuel1

1Department of Economics, University of Abuja, Nigeria

Pub. Date: January 17, 2018

Cite this paper:
Okoroafor O. K. David, Adeniji Sesan Oluseyi and Awe Emmanuel. Empirical Analysis of the Determinants of Financial Inclusion in Nigeria: 1990 - 2016. Journal of Finance and Economics. 2018; 6(1):19-25. doi: 10.12691/jfe-6-1-3

Abstract

This study examined the determinants of financial inclusion in Nigeria using a time series data for the period of 1990 to 2016. The study employed Error Correction Model (ECM) after conducting unit root test and cointegration test. The estimated result revealed positive and significant relationship between the financial inclusion and the proposed variables. Specifically, the higher a country’s GDP per capital, the more the financial inclusion in their financial system. Likewise the broad money given the continuous increase in the amount of money in circulation which will definitely improve financial inclusion in the country. Credit and internet users per 100 people also have positive and significant impact on financial inclusion. While the significant impacts of internet access have very vital implication for financial inclusion as the more the use of internet, the more the financial inclusion through extension of financial services to larger number of people living in the rural area without the exhaustive use of the internet, financial inclusion will be very teeny and extension who would have been excluded from the formal financial service in the country. The internet has fundamentally abridged the cost of transactions, through the use of mobile and the ATM. This has increased the capacities of credit delivery in remote areas in the country and has made it possible to provide home banking services where the accounts are operated by illiterate customers using mobiles phones.

Keywords:
financial inclusion GDP per capita broad money credit internet users & ECM

Creative CommonsThis work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

References:

[1]  Onaolapo, A. R. (2015). Effects of Financial Inclusion on the Economic Growth of Nigeria. International Journal of Business and Management Review, 11-28.
 
[2]  Martinez, M. V. (2011). The Political Economy of Increased Financial Access. Georgetown: A thesis submitted in Partial fulfilment of the requirement for the Degree of Master of Public Policy to the Faculty of the Graduate School of Arts and Sciences Georgetown University.
 
[3]  CIA, World Factbook. (2013). Country Factbook. World Factbook.
 
[4]  Usman, S. (2010). Insight into the State of the Nigeria Economy, Being a speech delivered by the Hon. Minister of National Planning Commission. Kano: Bayero University, Kano.
 
[5]  Awe, A.A and Olawumi, O.R. (2012). Determinant of Income distribution in the Nigerian Economy: 1997-2005. International Business and Management Journal, 15 (1), 126-137.
 
[6]  NBS. (2012). Annual Report. National Bureau of Statistics.
 
[7]  Khan, H. (2012). Issues and Challenges in Financial Inclusion: Policies, Partnerships, Processes and Products. Symposium on "Financial Inclusion in Indian Economy" organized by the Indian Institute of Public Administration. Bhubaneswar: Indian Institute of Public Administration.
 
[8]  Sanusi, L.S. (2010). The Nigerian Banking Industry: What went wrong and the way forward. Kano: Text of Convocation Lecture delivered at Bayero University, Kano.
 
[9]  Armendáriz de Aghion, B., & Morduch, J. (2005). The economics of microfinance (1st Edition) (Vol. First Edition): Massachuttes Institute of Technology.
 
[10]  Khandker, S. R. (2005). Microfinance and poverty: Evidence using panel data from Bangladesh. The World Bank Economic Review, 19(22), 263-286.
 
[11]  Ayamga, M., Sarpong, D. B., & Asuming-Brempong, S. (2006). Factors influencing the decision to participate in microcredit programmes: An illustration for Northern Ghana. Ghana Journal of Development Studies, 3(2), 57-65.
 
[12]  Akudugu, M. A., Egyir, I. S., & Akwasi, M.-B. (2009). Women farmers’ access to credit from rural banks in Ghana. Agricultural Finance Review, 69(3), 284-299.
 
[13]  Akudugu, M. A. (2010). Assessment of access to financial capital by rural people in Ghana: The case of the Upper East Region. Savings and Development, 34(2), 169-189.
 
[14]  Armendáriz de Aghion, B., & Morduch, J. (2010). The economics of microfinance (2nd Edition) (Vol. Second Edition): Massachuttes Institute of Technology.
 
[15]  Awunyo-Vitor, D., & Abankwah, V. (2012). Substitutes or complements: Formal and informal credit demand by maize farmers in Ashanti and Brong Ahafo Regions of Ghana. The Journal of Agricultural Science, 7(1), 1-13.
 
[16]  Rahji, M. A. Y; and S. A. Fakayode (2009). A Multinomial Logit analysis of Agricultural Credit Rationing by Commercial Banks in Nigeria. International Research Journal of Finance and Economics 24, 91. .
 
[17]  Sebstad, J., & Cohen, M. (2001). Microfinance risk management and poverty. Washington DC: Pact Publications.
 
[18]  Atkinson, A. and F. Messy (2013), “Promoting Financial Inclusion through Financial Education: OECD/INFE Evidence, Policies and Practice”, OECD Working Papers on Finance, Insurance and Private Pensions, No. 34, OECD Publishing.
 
[19]  McKinsey and Company (2010) Global Financial Inclusion, Achieving full financial inclusion at the intersection of social benefit and economic sustainability. http://mckinseyonsociety.com/global-financial-inclusion/.
 
[20]  Gardeva, A. and E. Rhyne. (2011), Opportunities and Obstacles to Financial Inclusion. Survey Report. Center for Financial Inclusion at ACCION International http://centerforfinancialinclusionblog.files.wordpress.com/2011/07opportunities-and-obstaclesto-financial-inclusion_110708_final.pdf.
 
[21]  Olaniyi, E. and Adeoye, B. (2016). Determinants of Financial Inclusion in Africa: A Dynamic Panel Approach. University of Mauritius Research Journal, Vol. 22.
 
[22]  Allen, F., Demirgüc¸-Kunt, A., Klapper, L., Peria, M.S.M., 2016. The foundations of financial inclusion: understanding ownership and use of formal accounts.J. Financ. Intermed. (forthcoming).
 
[23]  Fungácová, Z., Weill, L., 2015. Understanding financial inclusion in China.China Econ. Rev. 34, 196-206.
 
[24]  Demirgüc¸-Kunt, A., Klapper, L., Randall, D., 2013a. Islamic Finance and Finan-cial Inclusion: Measuring Use of and Demand for Formal Financial Servicesamong Muslim Adults (Policy Research Working Paper No. 6642). TheWorld Bank, Washington, DC.
 
[25]  L, Fungacova. and L. Weill, (2014). Understanding Financial Inclusion in China. BOFIT Discussion Papers, 10/2014. 8.4.2014. Download: dp 10141.pdf.
 
[26]  Tuesta, D., Sorensen, G., Haring, A., and Cámara, N. (2015). Financial inclusion and its determinants: the case of Argentina. Madrid: BBVA Research.
 
[27]  Clamara, N., Peña, X., and Tuesta, D. (2014). Factors that Matter for Financial Inclusion: Evidence from Peru. Madrid: BBVA Research.
 
[28]  Kostov, P., Arun, T., Annim, S., 2015. Access to financial services: the case of the “Mzansi” account in South Africa. Rev. Dev. Finance 5, 34-42.
 
[29]  Demirgüc¸-Kunt, A., Klapper, L., Singer, D., 2013b. Financial Inclusionand Legal Discrimination Against Women: Evidence From DevelopingCountries (Policy Research Working Paper No. 6416). The World Bank,Washington, DC.
 
[30]  Aterido, R., Beck, T., Iacovone, L., 2013. Access to finance in Sub-SaharanAfrica: is there a gender gap? World Dev. 47, 102-120.
 
[31]  Naceur, S. B., Barajas, A., and Massara, A. (2015). Can Islamic Banking Increase Financial Inclusion? Washington: International Monetary Fund (IMF).
 
[32]  Love, I. & Martinez Peria, M.S., (2012). How bank competition affects firms' access to finance. World Bank Policy Research Working Paper, (6163).
 
[33]  Aga, G.A. & Martinez Peria, M.S., (2014). International remittances and financial inclusion in Sub-Saharan Africa. World Bank Policy Research Working Paper, (6991).
 
[34]  Abdu, M., Buba, A., Adamu, I., and Muhammad, T. (2015). Drivers of Financial Inclusion and Gender Gap in Nigeria. The Empirical Econometrics and Quantitative Economics Letters. Volume 4, Number 4 (December 2015): pp. 186-199.