ABSTRACT

One of the remarkable developments in Nigeria is the introduction of the financial inclusion program by the Federal Government in 2012. This paper examined the effects of financial inclusion on economic development and growth of Nigeria (2011-2019). Financial inclusion is the state of financial system where every member of society has access to appropriate financial products and services for effective and efficient management of resources; get needed resources to finance their businesses; and financial leverage to take up opportunities that will lead to increase in their income. The objectives of this study were to determine the effect of Deposit Money Banks’ loan to Small and Medium-scale enterprises and rural customers, bank loans for agricultural sector and numbers of microfinance banks on the Human Development Index (HDI) in Nigeria, to examine the effect of Deposit Money Banks’ loan to Small and Medium-scale enterprises and rural customers, bank loans for agricultural sector and numbers of microfinance banks on the Gross Domestic Product (GDP) in Nigeria, to examine the effect of Deposit Money Banks’ loan to Small and Medium-scale enterprises and rural customers, bank loans for agricultural sector and numbers of microfinance banks on the Index of Industrial Production (IIP) in Nigeria. Human Development Index (HDI) proxy for economic development, Gross Domestic Product (GDP) and Index of Industrial Production (IIP) proxies for economic growth was adopted as dependable variables while Deposit Money Banks’ loan to Small and Medium-scale enterprises and rural customers, bank loans for agricultural sector and numbers of microfinance banks were adopted as the explanatory variables. Archival data sourced from secondary data sources, such as the Central Bank of Nigeria Statistical bulletin (2019) and United Nations Development Programme Annual Report was used for the estimation of the variables. Extracted data spanning about 9-year period; 2011 to 2019 were related using the Ordinary Least Square (OLS) technique involving multiple regression analysis. The empirical results revealed that Deposit money banks loans to small and medium scale enterprise and numbers of micro finance banks have positive and significant effect on economic growth while Commercial banks loan to agricultural sector has positive and significant effect on the economic development in Nigeria for the period under study. Thus, the paper recommends that; the Central bank of Nigeria should approve the establishment of micro-finance banks in order to meet the financial needs of low-income neighborhoods and rural dwellers; the Central bank of Nigeria should intensify efforts aimed at credit facilities to Small and Medium scale Enterprises (SMEs) to boost financial inclusion in the economy by mandating banks to dedicate 10% of their net profit after tax to SMEs loans and; Banks should ensure that the Know Your Customer (KYC) directives/manual issued by the Central Bank of Nigeria (CBN) is properly implemented so as to encourage prospective customers in the rural areas of the safety of their accounts.

TABLE OF CONTENTS

Cover page i

Title page ii

Declaration page     iii

Approval page iv

Dedication page v

Acknowledgement vi

Table of contentsvii

Abstract            viii

CHAPTER ONE: INTRODUCTION

1.1 Background of the study 1

1.2 Statement of the Problem4

1.3 Objectives of the Study 5

1.4 Research Questions5

1.5 Research Hypotheses 6

1.6 Significance of the Study 6

1.7 Scope of the Study8

1.8 Limitations of the Study 9

1.9 Definition of Operational Terms9

CHAPTER TWO: LITERATURE REVIEW

2.1 Conceptual Review 11

2.1.1 Concept of financial inclusion11

2.1.2 Objectives of financial inclusion14

2.1.3 Importance of financial inclusion15

2.1.4 Advantages of financial inclusion16

2.1.5 Challenges of financial inclusion16

2.1.6 Tools for implementing the financial inclusion programme17

2.2 Theoretical Framework 29

2.3 Empirical Review 31

2.4 Summary of Review and Literature 35

2.5 Gap in Literature 37

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Research Design 38

3.2 Sources of data collection38

3.3 Model specification and Validity 38

3.4 Description of variables40

3.5 A priori expectations42

3.6 Method of data analysis42

3.7 Method of data presentation and criteria for analysis43

CHAPTER FOUR :DATA PRESENTATION AND ANALYSIS

4.1 Presentation of Data45

4.2 Data Analysis 45

4.2 Test of Hypotheses 48

4.3 Discussion of Findings51

CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1 Summary of Findings 53

5.2 Conclusion 54

5.3 Recommendations 55

References

Appendix: