Financial Inclusion, Governance and Welfare Analysis in Nigeria
Keywords:
Financial inclusion, poverty, income inequality, Economic progress
Abstract
Some of the macroeconomic challenges inherent in the Nigerian economy are poverty and income inequality. For sustainable and inclusive growth, the crucial elements of financial inclusion and transparent democratic practice need to be put into consideration. This study enquired empirically the impact of financial inclusion and governance characteristics on welfare in Nigeria through three key channels: investment in infrastructure, per capita GDP and income inequality. The data covered the period 1980-2014, while the study relied on the Generalised Method of Moment (GMM) estimation technique for the analysis. It was discovered that financial inclusion and governance indices have statistical relevance in determining infrastructural investment in Nigeria. The result also showed that governance indices and commercial bank deposit significantly increase per capita GDP; and that financial inclusion has the tendency to bridge the gap between the rich and the poor and reduce the prevalence of poverty in the economy. The findings suggested that to reduce income inequality and increase per capita GDP, more measures must be taken to address financial exclusion of low-income groups from financial services; and that transparent democratic practice that will stimulate investment in infrastructure and enhance per capita GDP should be instituted in Nigeria.
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Sarma, M. (2008). Index of financial inclusion. Working Paper No. 215. Indian Council for Research on International Economic Relations. 1-26.
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Serrao, M., Sequeira A.H. and Hans B.V. (2012). Designing a methodology to investigate accessibility and impact of financial inclusion.
Subbarao, D. (2009). Financial inclusion: Challenges and opportunities. Presented at the Reserve Bank of India’s Bankers Club, Kolkata, December 9.
World Bank (2015). How to measure financial inclusion. Accessed from wwwindicators.
World Bank Governance Indicator (2015). Data bank. Available at worldbank.org.
World Income Inequality Data (2015). Income data. Available at www.wider.unu.edu.
Yang, B. (2011). Does democracy foster financial development? An empirical analysis. Economics Letters, 112(3): 262-265.
Acemoglu, D., Johnson, S. and Robinson, J.A. (2012). The colonial origins of comparative development: An empirical investigation. The American Economic Review, 102(6): 3077-3110.
Aduda, J. and Kalunda, E. (2012). Financial inclusion and financial sector stability with reference to Kenya: A review of literature. Journal of Applied Finance and Banking, 2(6): 95-120.
African Development Bank (AfDB) (2013). Financial inclusion in Africa. Accessed from www.afdb.org.
Allen, F.E., Carletti R., Cull J. Senbet Q.L. and Valenzuela P. (2013). Resolving the African financial development gap: Cross-country comparisons and a withincountry study of Kenya. World Bank Policy Paper No.6592. Washington DC.
Brune, L., Giné X., Goldberg J. and Yang D. (2011). Commitments to save: A field experiment in rural Malawi. World Bank Policy Research Paper No.5748. Washington DC.
Burgess, R. and Pande, R. (2005). Do rural banks matter? Evidence from the Indian social banking experiment. American Economic Review, 95(3): 780–795.
Carbo, S., Gardener E.P. and Molyneux P. (2007). Financial exclusion in Europe. Public Money and Management, 27(1): 21-27.
Central Bank of Nigeria – National Financial Inclusion Strategy (CBNNFIS). (2012). Summary report on financial inclusion in Nigeria. Abuja, 20th January. Available at www.cenbank.org.
Central Bank of Nigeria (2013). CBN Statistical Bulletin. CBN, Abuja. 24.
Central Bank of Nigeria (2014). CBN Statistical Bulletin. CBN, Abuja. 25.
Central Bank of Nigeria (2015) . CBN Statistical Bulletin. CBN, Abuja. 26.
Central Bank of Nigeria (2015). National financial inclusion strategy. Summary report. CBN, Abuja.
Clarida, R., Gal ́ı, J. and Gertler, M. (2000). Monetary policy rules and macroeconomic stability: Evidence and some theory. Quarterly Journal of Economics, 115: 147 80.
Dabla-Norris, E., Ji Y., Townsend R. and Filiz U. (2015). Financial deepening, growth, and inequality: A structural framework for developing countries. IMF Working Paper. International Monetary Fund, Washington DC.
EFInA Report. (2010), EFInAx – Access to Financial Services in Nigeria 2010 Survey. http://www.efina.org.ng/assets/ResearchDocuments/2013Documents/EFInAAccess-toFinancial-Services-in-Nigeria-2012-surveyKey-Findings2.pdf.
Energy Information Administration (2015). Statistical data bank. EIA.
Han, R. and Melecky, A. (2013). Financial inclusion for financial stability: Access to bank deposits and the growth of deposits in the global financial crisis. World Bank Policy Research Paper, No.6577.
Haber, S.H., North, D.C. and Weingast, B.R. (2008). Political Institutions and Financial Development. Stanford University Press, Stanford.
Hansen, L.P. (1982). Large sample properties of generalized method of moments estimators. Econometrica, 50: 1029-1054.
Hariharan, G. and Marktanner, M. (2012). The growth potential from financial inclusion. Available at www.frbatlanta.org/documents/news/conferences.
Huang, Y. (2010). Political Institutions and financial development: An empirical study. World Development, 38(12): 1667-1677.
Honaker, J. and King, G. (2011). Applications of modern methods for analyzing data with missing values, based primarily on multiple imputations. American Journal of Political Science, 54(2): 561–581.
Honahan, P. (2007). Cross-country variation in household access to financial services. World Bank Paper conference on Access to Finance. Washington DC.
Honohan, P. (2008). Cross-country variation in household access to financial services. Journal of Banking and Finance , 32: 2493–2500.
International Monetary Fund (2005). Financial access survey (FAS) data. Available at www.imf.org.
Kaufmann, D., Kraay, A. and Zoido-Lobatón, P. (2000). Governance matters. Finance Development , 37(2): 10.
Maravall, A. and Pena, D. (2014). Missing observations and additive outliers in time series models: Interpolation using ARIMA processes. Accessed from www.bde.es.
Mbutor, O.M. and Uba I.A. (2013). The impact of financial inclusion on monetary policy in Nigeria. Journal of Economics and International Finance , 5(8): 318-326.
Mehrotra, A. and Yetman, J. (2015). Financial inclusion and optimal monetary policy. Paper at the joint conference of the European Central Bank and the Central Bank of the Republic of Turkey, Frankfurt, 27-28 August.
Migap, J.P, Okwanya, I. and Ojeka, G. (2015). Financial inclusion for inclusive growth: The Nigerian perspective. International Journal of Information Technology and Business Management, 37(1): 1-8. African Development Bank (AfDB) (2015). Data bank. Natural Earth.
Njideka, U.H. (2014). How to promote financial inclusion in Nigeria. Available at www.weforum.org/agenda/2014.
Onaolapo, A.R. (2015). Effects of financial inclusion on the economic growth of Nigeria (1982-2012). International Journal of Business and Management Review 3(8):11-28.
Roe, M.J. and Siegel, J.I. (2011). Political instability: Effects on financial development, roots in the severity of economic inequality. Journal of Comparative Economics, 39(3): 279-309.
Sarma, M. (2008). Index of financial inclusion. Working Paper No. 215. Indian Council for Research on International Economic Relations. 1-26.
Sarma, M. and Pais J. (2010). Financial inclusion and development. Journal International Development, 23: 613-628.
Serrao, M., Sequeira A.H. and Hans B.V. (2012). Designing a methodology to investigate accessibility and impact of financial inclusion.
Subbarao, D. (2009). Financial inclusion: Challenges and opportunities. Presented at the Reserve Bank of India’s Bankers Club, Kolkata, December 9.
World Bank (2015). How to measure financial inclusion. Accessed from wwwindicators.
World Bank Governance Indicator (2015). Data bank. Available at worldbank.org.
World Income Inequality Data (2015). Income data. Available at www.wider.unu.edu.
Yang, B. (2011). Does democracy foster financial development? An empirical analysis. Economics Letters, 112(3): 262-265.
Published
2017-09-01
Section
Articles
