Title:
FINANCIAL INCLUSION, DOMESTIC INVESTMENT AND SELECTED MACROECONOMIC PERFORMANCE IN NIGERIA

Authors:
Akeeb Olushola Oladele, Alwell Nteegah, Okechuku Onuchuku, and Monday Olulu Robinson, Nigeria

Abstract:

The high level of unbanked public and the need to improve the performance of the economy through financial inclusion, make it imperative to investigate how financial inclusion has reduced unemployment, poverty and stabilised prices in Nigeria. To achieve the objectives of the paper, time series data were sourced and analysed using the Autoregressive and Distributed Lag (ARDL) technique. The results show that: Credit penetration, deposit penetration and domestic investment were positively and insignificantly related to unemployment rate in the long run. In the short run, credit penetration, deposit penetration and domestic investment penetration were negatively but significantly related to unemployment rate. Bank’s branches penetration was negatively related to unemployment in the long run but positively linked to unemployment rate in the short run. This implies that banks penetration retarded unemployment in the long run but does not in the short run. Hence financial inclusion had significant implication on unemployment in the short run and less impact on unemployment in the long run. The long and short-run results of the poverty rate model shows that deposit penetration, branches penetration and investment penetration all had negative and significant relationship with poverty. This implies that financial inclusion significantly retarded poverty in Nigeria. Financial inclusion has mix implications on price stability both in the short and long run. The results also show that the macroeconomic variables adjust speedily to changes in financial inclusion. The goodness of fit shows that financial inclusion has serious implication on macroeconomic performance in Nigeria. Based on these findings, the study concludes that financial inclusion has significant implications on poverty and less impact on unemployment hence recommends: increase in deposit mobilisation through savings, domestic credit and banks’ branches to create jobs and reduce poverty in Nigeria.