Financial Inclusion: A Panacea for Balanced Economic Development

The major objective of this paper was to determine the effect of financial inclusion on economic growth and development in Nigeria using historical data on selected variables over the period 1986-2015. Ordinary Least Squares regression technique was adopted. Financial inclusion was measured in the study using loan to deposit ratio (LDR), financial deepening indicators (FDI), loan to rural areas (LRA), and branch network (Bbranch). Measures of financial deepening adopted in the study are ratios of private sector credit to GDP and broad money supply to GDP. Economic growth was proxied as growth in gross domestic product (GDP) over successive periods while per capita income (PCI) was adopted as a measure of poverty and hence an index of development. The main findings are (i) credit delivery to the private sector (an index of financial inclusion) has not significantly supported economic growth in Nigeria (ii) financial inclusion has promoted poverty alleviation in Nigeria through rural credit delivery. The study recommends that the monetary authorities should not only deepen financial inclusion efforts through enhanced credit delivery to the private sector but should also strengthen the regulatory framework in order to ensure efficient and effective resource allocation and utilization.