Authors:
Obialor, Chinedu Blessing-Mike
, Ejiofor, Emmanuel Onyeka
, Ubogu, Festus Elugom
and Onwuka, Cletus
Offor |
Abstract:
Financial inclusion is becoming a policy matter in both developed and emerging economies of the
world since it has been seen as a proper and useful tool for poverty alleviation and economic growth.
Against this background, this paper examines the effect of financial inclusion on the standard of
living in Nigeria (1988-2017). Annual time series data was obtained from the CBN Statistical
Bulletin for the period under study. Deposits of rural branches of commercial banks(DRBCB), Loans
to rural branches of commercial banks(LRBCB),Loans to Agricultural sector(LAS),and Credit to
private sectors(CPS)are proxies for financial inclusion which is the independent(explanatory)
variable. While per capita income (PCI) is the proxy for standard of living which is the dependent
(explained) variable. The study employed autoregressive distributed lag (ARDL) bound cointegration test for the analysis with the help of E-views 9.0. The outcome of the study showed that a
long run relationship exists between Per Capita Income (PCI) and financial inclusion proxies. The
results also showed that financial inclusion proxies have a mixed effect on Per Capita Income.
While Deposits of Rural Branches of Commercial Banks and Private Sector Credit have a positive
effect, Loans of rural Branches of Commercial Banks and Loans to the Agricultural Sector have a
negative effect. The study concludes that since some of the proxies of financial inclusion positively
affects the Standard of living and some have negative effects, a lot more need to be done to improve
on the intermediation activities in order to include more people in the intermediation process. It
therefore recommends among others that a better loan packaging strategy that meets the aspiration of
small farmers and small business people especially in the rural areas should be introduced.
Specifically, long term loans, low cost of acquiring loans, more monitoring and supervision of the
loans are recommended. More branches of commercial banks have to be opened in many rural areas
to increase the banking habit and wider access to bank credit. |
