Advancing inclusive growth in Nigeria: The role of financial inclusion in poverty, inequality, household expenditure, and unemployment

Musa Abdullahi Sakanko, Joseph David, Aliyu Musari Onimisi


This study employs ARDL bounds testing technique to examine the effect of financial inclusion on inclusive growth in Nigeria, using quarterly data from 2007-2018. The empirical evidence reveals the presence of cointegration between financial inclusion indicators (account ownership, access to bank, ATM and credit, loans to SMEs and internet usage) and inclusive growth (poverty, household expenditure, employment, and per capita income). The results demonstrate that, while increase in account ownership, and access to bank and ATM raise poverty, and access to credit, loans to SMEs and internet usage reduces employment and per capita income in the long-run, it was also discovered that access to credit reduce poverty and increase household consumption, while account ownership and access to bank increases employment and per capita income in the long-run. In the short-run: lag of account ownership, access to ATM and credit, loan to SMEs and internet usage reduces poverty; lag of household expenditure, account ownership, and access to ATM and lag of internet usage increases household expenditure; lags of access to ATM and lags of internet usage (and account ownership and access to bank) increases employment opportunities (and per capita income); and access to ATM and credit reduces employment and per capita income respectively.


Financial Inclusion; Inclusive Growth; Inequality; Poverty; Unemployment

Full Text:



Abu, N. (2017). Does Okun's law exist in Nigeria? Evidence from ARDL bounds testing approach. Contemporary Economics, 11(2), 131-144.

Abu, N. (2019). Inflation and unemployment trade-off: A re-examination of the Phillips curve and its stability in Nigeria. Contemporary Economics, 13(1), 21-34.

Abu, N., Kadandani, B., Obi, B., Modibbo, M. (2019). How Does Pensions Affect Savings in Nigeria? Evidence from Quarterly Data. Scientific Annals of Economics and Business, 66(4):541-558.

Adamu, M.B. & Suleiman, M. (2018). Financial Inclusion and Inclusive Growth: Evidence from West and East African Countries. Proceedings of 4th International Conference on Social Sciences (ICSS 2018) – Economics, held from 21th – 22th March 2018, at Nile University, Abuja, Nigeria

Adediran, O.S, Oduntan, E. & Matthew, O. (2017). Financial Development and Inclusive Growth in Nigeria: A Multivariate Approach. Journal of Internet Banking and Commerce, 22(8):1-14

Adeola, O. (2016). Financial Inclusion, financial Development and Economic Diversification in Nigeria. Proceedings of the International Conference for Bankers and Academics 2016, Dhaka (503-516). Dhaka, Bangladesh.

Afolabi, J.O. (2020). Impact of Financial Inclusion on Inclusive Growth: An Empirical Study of Nigeria. Asian Journal of Economics and Empirical Research, 7(1):8-14.

Agyemang-Badu, A.A., Agyei, K. & Duah, E.K. (2018). Financial Inclusion, Poverty and Income Inequality: Evidence from Africa. Spiritan International Journal of Poverty Studies, 2(2)

Akinlo, A.E. (2006). The stability of money demand in Nigeria: An autoregressive distributed lag approach. Journal of Policy Modelling, 28(4):445-452.

Anand, R., Mishra, S., & Peiris, S. (2015). Inclusive Growth revisited: Measurement and evolution. Vox EU. org. Centre for Economic Policy Research. Retrieved, 13.

Anand, R., Mishra, M. S., & Peiris, S. J. (2013). Inclusive growth: Measurement and determinants (No. 13-135). International Monetary Fund.

Bakari, I.H., Donga, M., Idi, A., Hedima, J.E., Wilson, K., Babayo, H. & Ibrahim, Y. (2019). An examination of the Impact of Financial Inclusion on Poverty Reduction: An Empirical Evidence from Sub-Saharan Africa. International Journal of Scientific and Research Publications, 9(1):239-252.

Balakrishnan, R. Steinberg, C. & Syed, M. (2013). The Elusive Quest for Inclusive Growth: Growth, Poverty, and Inequality. International Monetary Fund (IMF) Working Paper, WP/13/152

Balele, N.P. (2019). The Impact of Financial Inclusion on Economic Growth in Sub-Saharan Africa. Journal of Applied Economics and Business, 7(4):51-68

Bhandari, A.K. (2009). Access to banking services and poverty reduction: a state-wise assessment in India, IZA Discussion Papers, No. 4132, Institute for the Study of Labor (IZA), Bonn,

Bruhn, M. & Inessa, L. (2009). The economic impact of banking the un-banked: evidence from Mexico. World Bank Policy Research working paper.

David, J. (2018). Infant Mortality and Public Health Expenditure in Nigeria: Empirical Explanation of the Nexus. Timisoara Journal of Economics and Business (TJE&B), 11(2): 149-164.

David, J., Sakanko, M.A., & Ladan, A.S. (2019). Prudent macroeconomic management and poverty reduction: Empirical evidence from Nigeria. Dutse International Journal of Social and Economic Research (DIJSER), 2(1):84-94

Demirgüç-Kunt, A., Klapper, L., Singer, D., Ansar, D. & Hess, J. (2018). The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. Washington, DC: World Bank.

Demirguc-Kunt, A., Klapper, L., & Singer, D. (2017). Financial Inclusion and Inclusive Growth: A Review of Recent Empirical Evidence. World Bank Group Policy Research Working Paper No. 8040

Duasa, J. (2007). Determinants of Malaysian trade balance: An ARDL bound testing approach. Global Economic Review, 36(1):89-102.

Dupas, P.D., Karlan, J. R. & Ubfal, D. (2016). Banking the Unbanked: Evidence from three Countries. NBER Working Paper No. 22463.

Engle, R.F. & Granger, C.W.J. (1987). Co-integration and error correction: Representation, estimation and testing. Econometrica, 55(2), 251-276.

Fadun, S.O. (2014). Financial Inclusion, Tool for Poverty Alleviation and Income Redistribution in Developing Countries: Evidences from Nigeria. Academic Research International, 5(3):137-146

Grant, M. & Kagan, J. (April 19, 2019). What Is Financial Inclusion? Retrieved May 10, 2019, from

Gul, F., Usman, M. & Majeed, M.T. (2018). Financial Inclusion and Economic growth: A global perspective. Journal of Business and Economics, 10(2):133-152

Johansen, S. (1988). Statistical analysis of cointegration vectors. Journal of Economic Dynamics & Control, 12(2-3), 231-254.

Johansen, S. & Juselius, K. (1990). Maximum likelihood estimation and inference on cointegration - With applications to the demand for money. Oxford Bulletin of Economics and Statistics, 52(2), 169-210.

Kama, K. & Adigun, M. (2013). Financial Inclusion in Nigeria: Issues and Challenges. Central Bank of Nigeria (CBN), Occasional Paper No. 45

King, R. G. & Levine, R. (1993). Finance and Growth: Schumpeter Might Be Right. Quarterly Journal of Economics, 108: 717-738.

Levine, R. (1997). Financial Development and Economic Growth: Views and Agenda. Journal of Economic Literature, 35:688-726.

Migap, J.P, Okwanya, I. & Ojeka, G. (2015). Financial Inclusion for Inclusive Growth: The Nigerian Perspective. International Journal of Information Technology and Business Management, 37(1):1-8

Mugo, M. & Kilonzo, E. (2017). Community – Level Impacts of Financial Inclusion in Kenya with Particular Focus on Poverty Eradication and Employment Creation.

Narayan, P. K., 2005. The saving and investment nexus for China: Evidence from cointegration tests. Applied Economics, 37(17), 1979-1990.

Nwafor, M.C., & Yomi, A.I. (2018). The Nexus between Financial Inclusion and Economic Growth: Evidence from Nigeria. International Journal of Research and Innovation in Social Science (IJRISS), 2(4):143-149

Nyarko, E.S. (2018). Financial Inclusion, Financial Literacy and Inclusive Growth in Africa, a published PhD thesis submitted to the department of Finance, University of Ghana. Retrieved from http://ugspace.Ug.Edu.Gh

Odeleye, A.T. & Olusoji, M.O. (2016). Financial Inclusion and Inclusive Growth in Nigeria. Retrived 25 February, 2020, from at:

Okoye, L.U., Adetiloye, K.A., Erin, O. Modebe, N.J. (2017). Financial Inclusion as a Strategy for Enhanced Economic Growth and Development. Journal of Internet Banking and Commerce, 22(8)

Omojolaibi, J.A. (2017). Financial inclusion, governance and economic progress in Nigeria: What happens to the welfare of the poor? Arabian Journal of Business and Management Review, 6(7):72-85

Otiwu, K.C, Okere, P.A, Uzowuru, L.N, & Ozuzu, P.N. (2018). Financial inclusion and economic growth of Nigeria. International Journal for Innovation Education and Research (the microfinance option), 6(2):61-74

Oyewo, B.M. & Oyewole, O.S. (2014). Financial System, Financial Inclusion and Economic development in Nigeria. International Journal of Management Sciences, 2(3):139-148

Park, C., & Mercado, Jr., R. V. (2015). Financial inclusion, poverty, and income inequality in developing Asia. Manila: Asian Development Bank.

Pesaran, M. H., & Shin, Y. (1999). An Autoregressive Distributed Lag Modeling approach to Cointegration Analysis. In S. Strøm (Ed.), Econometrics and economic theory in the 20th century: The Ragnar Frisch Centennial Symposium. Econometric society monographs (Vol. 31, pp. 1-31). Cambridge, UK: Cambridge University Press.

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289- 326.

Qazi, M. (July 30, 2018). Financial inclusion is the key to inclusive growth. The Asian Age. Retrieved March 01, 2020, from

Ranieri, R. & Ramos, R.A. (March 2013). Inclusive Growth: Building up a Concept. Working Paper. 104. Brazil: International Policy Centre for Inclusive Growth.

Raichoudhury, A. (2016). Financial Inclusion & Human Development: A Cross Country Analysis. Asian Journal of Business Research, 6(1):34-48.

Rauniyar, G. & Kanbur, R. (2010). Inclusive Development: Two Papers on Conceptualization, Application, and the ADB Perspective. Manila: Asian Development Bank.

Sakanko, M. A. (2020). Financial inclusion and women participation in gainful

employment: an empirical analysis of Nigeria. Indonesian Journal of Islamic Economics Research, 2(1); 1-13.

Sakanko, M.A., Abu, N., & David, J. (2019). Financial Inclusion: A Panacea for NationalDevelopment in Nigeria. Proceedings of 2nd National Conference of the Faculty ofSocial Sciences, Federal University Lafia, Nigeria, captioned: “Emerging Socio-Economics and Political Challenges and National Development” held on Sept. 22–24, 2019.

Sakanko, M.A., Obilikwu, J. & David, J. (2019). Oil Price Volatility and Balance of Payments (BOP): Evidence of Nigeria. Bingham Journal of Economics and Allied Studies (BJEAS), 2(3):167-181.

Sakanko, M.A. & David, J. (2018). Assessment of the Millennium Development Goals (MDGs) on the Eradication of Poverty and Hunger in Nigeria. International Journal of Research in Arts and Social Sciences, 11(2):257-268

Sarma, M. & Pais, J. (2011). Financial inclusion and development. Journal of International Development, 23(5):613-628.

Schumpeter, J.A. (1911). The Theory of Economic Development, New York: Oxford University Press.

Sethy, S.K. (2016). Developing a financial inclusion index and inclusive growth in India. Theoretical and Applied Economics, 23(2-607):187-206

Sharma, D. (2016). Nexus between financial inclusion and economic growth Evidence from the emerging Indian economy. Journal of Financial Economic Policy, 8(1):13-36.

Shaw, E.S. (1973). Financial deepening in economic development. Oxford University Press, New York.

Swamy, V. (2010). Bank-based financial intermediation for financial inclusion and inclusive growth. Banks and Bank Systems, 5(4):1–12. Retrieved from

Ugoani, J.N.N. (2017). Prudent Macroeconomic Management for Poverty Reduction and Sustainable Development in Nigeria. International Journal of Economics and Financial Research, 3(11), 272-281

Umar, A. (2013). Cross-country variation in household access to financial services. Journal of Banking and Finance, 32(1):2493-2500.

United Nations Development Programme (2019). 2018 Human Development Data Bank. Retrieved 27 June, 2019

Van, D.T.T. & Linh, N.H. (2019). The Impacts of Financial Inclusion on Economic Development: Cases in Asian‑Pacific Countries. Comparative Economic Research. Central and Eastern Europe, 22(1):1-16.

Vanguard (February 15, 2019). 91m Nigerians now living in extreme poverty. Retrieved March 1, 2019, from extreme-poverty/

World Bank (2019). World Development Indicators database. Washington, DC. Accessed 6 March 2020.

World Bank (2018, 2nd October). Financial Inclusion Overview. Retrieved May 10, 2019, from

Zia, I.Z. & Prasetyo, P.E. (2018). Analysis of Financial Inclusion Toward Poverty and Income Inequality. Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan, 19(1):114-125.

Zulfiqar, K., Chaudhary, M.A. & Aslam, A. (2016). Financial Inclusion and Its Implications for Inclusive Growth in Pakistan. Pakistan Economic and Social Review, 54(2):297-325



  • There are currently no refbacks.

Copyright (c) 2020 Indonesian Journal of Islamic Economics Research

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Indonesian Journal of Islamic Economics Research, p-ISSN 2686-5076 l e-ISSN 2714-5751

This work is licensed under a Creative Commons Attribution 4.0 International License.


Web Analytics Made Easy - StatCounter