Financial inclusion as a pathway to welfare enhancement and income equality: Micro-level evidence from Nigeria

Testing the impact of financial inclusion on income convergence: Empirical evidence from Nigeria

“…For instance, one cardinal objective of financial inclusion is to prevent individuals from irregular cash flow through savings and loans. While savings essentially allow individuals to have steady expenditure over time by foregoing present expenditure for future expenditure, loans allow individuals to forego future expenditure for present expenditure (Ibrahim et al, 2019). Similarly, financial inclusion can provide households with formal financial services for transaction purposes, storing wealth, and in extreme cases, to use insurance services against covariate and idiosyncratic shocks (Adegboye & Samuel, 2018).…”

“…A number of researches have also attempted to determine the nexus between household income and financial inclusion. Vast rigorous empirical evidence documents a strong positive effect of inclusive finance on level of income (Dimova & Adebowale, 2018; Ibrahim et al, 2019; Zhang & Posso, 2019), access to finance and women empowerment (Ogunleye, 2017), banking outreach and poverty reduction (Ayele, 2015). A mounting body of literature has convincingly explored the potential of financial inclusion as a driver of income growth, welfare enhancement, and poverty reduction (Aliero et al, 2010; Dimova & Adebowale, 2018; Gani & Ibrahim, 2015).…”

“…While advanced economies have enhanced financial access (such as savings, credit, and insurance, among others), in the majority of less advanced economies, the overwhelming proportion of adults still lack access to formal financial services (Dimova & Adebowale, 2018). With 13% of unbanked adults, South Africa has the lowest proportion of financial exclusion among the major African economies (Ibrahim, Ozdeser, & Cavusoglu, 2019). However, financial inclusion has evolved over time in Nigeria, with some stylized statistics pointing to an increase in financially included adults from 23.6% in 2008 to 48.6% in 2014 (Enhancing Financial Innovation and Access (EFInA), 2017).…”

“…However, financial inclusion has evolved over time in Nigeria, with some stylized statistics pointing to an increase in financially included adults from 23.6% in 2008 to 48.6% in 2014 (Enhancing Financial Innovation and Access (EFInA), 2017). This was partly achieved as a result of the successful transition from a repressed to a liberalized financial system as well as the success recorded after the implementation of the National Financial Inclusion Strategy in 2012 (see Dimova & Adebowale, 2018; Ibrahim et al, 2019 for review).…”

“…Some stylized statistics have, for instance, indicated that the proportion of Nigeria's financial inclusion has dropped from the record 48.6% achieved in 2014 to 38.3% in 2016 (CBN, 2017; EFInA, 2017). Similarly, in the rural areas where about 63.9% of the adult population are based, the proportion of banked adults dropped from 25% in 2014 to 24.4% in 2016 (EFInA, 2017; Ibrahim et al, 2019) due to some social and institutional challenges, such as the mounting dominance of the informal sector, low human development, demographic challenges (Aliero, Ibrahim, & Shuaibu, 2013), and infrastructural deficiencies (Dimova & Adebowale, 2018; Gani & Ibrahim, 2015).…”