ABSTRACT

The study analyzed effect of financial inclusion on poverty alleviation in Nigeria using time series data spanning 27 years from 1992 to 2018. Financial inclusion was measured by a number of variables: electronic money operations, commercial banks branches, commercial banks credit to rural populace, deposits of customers in the banking sector, microfinance bank branches, microfinance banks credits and microfinance banks deposits, while poverty alleviation was measured by per capita income, being the average income in an economy divided by the population. The data analysis was carried out with the technique of autoregressive distributed lag (ARDL) since the test for stationarity revealed that the variables under consideration were of mixed integration. The ARDL bounds test revealed that financial inclusion and poverty alleviation cointegrated, that is, a long-run relationship existed among the variables under consideration. In the long-run, deposits of customers in the banking sector and microfinance bank branches were the most significant financial inclusion measures. However, the long-run coefficients showed that electronic money operations, commercial banks credit to rural populace, microfinance banks credits and microfinance banks deposits had positive effect on per capita income while commercial banks branches, deposits of customers in the banking sector and microfinance bank branches had negative effect on per capita income. In the short-run, commercial and microfinance bank branches (CBB and MCBB) had negative effect on per capita income while all other variables had a positive effect. On the other hand, all the explanatory variables were significant except commercial banks credit to rural populace, deposits of rural commercial and microfinance banks deposits. Based on these findings, the study concluded that financial inclusion was majorly transmitted through commercial and microfinance banks towards poverty alleviation. Hence, policies aimed at driving financial inclusion and poverty alleviation were recommended.