Financial inclusion and poverty reduction in Nigeria: A survey-based analysis

Abstract

Financial inclusion's impact on poverty and economic development has remained a focus of researchers and policymakers for years, owing to its function in facilitating access to financial services, which act as a stimulus for general economic growth and development. The purpose of this study is to determine the effect of financial inclusion on poverty reduction in Nigeria. We estimated two models using data from the World Bank's 2017 Global Findex survey for Nigeria: a Logit model and an Instrumental variable model. The dependent variable was a dummy variable labeled "poor," which was set to 1 if the individual's "within economy income quintile" was in the bottom 40%, and 0 otherwise. The explanatory variables include, financial inclusion index constructed by the author, age of respondents, educational level of respondents, gender, employment status, wage, government transfers, pension, savings, and self-employment. The study established that financial inclusion reduces household poverty in Nigeria even after controlling for endogeneity in the explanatory variables.