Nigerian Journal of Banking and Financial Issues (NJBFI)

DOES FINANCIAL INCLUSION LEAD TO POVERTY REDUCTION? A CASE STUDY IN NIGERIA

Abstract

This study examined if financial inclusion schemes have led to significant poverty reduction in Nigeria. Specifically, it examined how rural banks’ credits (RBC), Rural Savings Mobilization (RSM), Number of Bank Branches (NBB) and Bank Lending Rate (BLR) have contributed to reducing poverty levels which was proxied by Household Consumption Expenditures (HCE). Annual Data were acquired from the CBN statistical bulletin from various years within the period 1985 -2023 and analyzed using OLS multiple regression after carrying out the Phillips-Perron Unit Root Test. The result revealed that RBC assert a positive insignificant impact on HCE with t-statistic and prob-value of (1.828139; 0.0763 > 0.05); RSM asserts a positive but significant impact on HCE with t-statistics and prob-value of (2.417841; 0.0211 < 0.05); NBB assert a significant positive impact on the HCE with a t-statistic and p-value of (9.722360; 0.0000 < 0.05); however, BLR has a negative and significant impact on HCE with a t-statistics and p-value of (-2.183577; 0.0360 < 0.05). The study recommended that the Central Bank of Nigeria needs to come up with effective MPR that can influence financial inclusion and alleviation of poverty. This will encourage accessibility to financial services at affordable cost for poverty reduction purposes.