FINANCIAL DEEPENING AND POVERTY IN NIGERIA
Abstract
This paper examined the influence of financial deepening on poverty reduction in Nigeria from 1981 to 2022. To achieve the above objective, secondary data on poverty incidence, private sector credit as a ratio of GDP in %, broad money supply as a ratio of GDP in %, inflation rate and monetary policy rate were collected from the statistical bulletin published by Nigeria's central bank and bureau of statistics. The Autoregressive Distributed Lag - ARDL method was used as the main tool to analyze the data. The ARDL Bounds test showed that there is a long-term connection between the above mentioned variables. In addition, the results showed that both in the long run and short run, private sector credit as a ratio of GDP in % has a mitigating influence on poverty incidence. Meanwhile, broad money supply as a ratio of GDP in % has a detrimental influence on poverty incidence, although significant in the short run. Regarding the control variables, this study discovered in the short run a significant positive influence of monetary policy rate and inflation rate on poverty incidence in Nigeria during the period of study. The result indicated that inflation and high monetary policy rate are consistently detrimental for the poor. But in the long run, monetary policy rate has a significant positive relationship with poverty incidence. However, inflation rate has a significant negative relationship with poverty incidence. The estimation suggested that financial deepening has a potential to reduce poverty in Nigeria. That is, if financial deepening is well pursued, it will contribute to the reduction in poverty incidence in Nigeria. Therefore, this study recommended the need to foster an expansion in credit to the private sector to reduce poverty in Nigeria. The government should start working on policies that will help make the financial system stronger and create new financial reforms. These policies should help improve the quality of life of people in Nigeria in a fair and meaningful way.
Article visualizations:
Keywords
Full Text:
PDFReferences
Abili, I. D. (2020). Impact of financial deepening on socio-economic development in Nigeria: 1991 - 2018, Central Bank of Nigeria Bullion, 44(4), Article 3. Retrieved from https://dc.cbn.gov.ng/cgi/viewcontent.cgi?article=1045&context=bullion
Adeleye, B. N., Nathaniel, S., Ogunrinola, I. & Ikuemonisan, E. (2021). Financial Deepening and Income Inequality in Nigeria: Evidence from Zivot-Andrews and Gregory-Hansen Structural Break Analyses. Studies of Applied Economics, 39(8), 1-6. https://doi.org/10.25115/eea.v39i8.4348
Akinboade, O. A., & Kinfack, E. C. (2013). Financial sector development and poverty reduction in Cameroon. International Journal of Social Economics, 40(7), 590–607.
Bakare, L. A. (2022). Analysis of Financial Deepening and Poverty Reduction in Nigeria. Arabian Journal of Business and Management Review (Kuwait Chapter), 11(1), 25-35. Retrieved from https://www.arabianjbmr.com/pdfs/Arabian%20Journal%20of%20Business%20and%20Management%20Review%20(Kuwait%20Chapter)_KD_VOL_11_1_2022/4_ajbmrkd_11012022.pdf
Banerjee, A. V., & Duflo, E. (2011). Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. Public Affairs. Retrieved from https://www.researchgate.net/publication/233756407_Poor_Economics_A_Radical_Rethinking_of_The_Way_to_Fight_Global_Poverty
Beck, T., & Honohan, P. (2010). Making Finance Work for Africa. World Bank. Retrieved from https://documents.worldbank.org/en/publication/documents-reports/documentdetail/254441468009032125
Beck, T., Demirgüç-Kunt, A., & Levine, R. (2007). Finance, inequality and the poor. Journal of Economic Growth, 12(1), 27–49. https://doi.org/10.1007/s10887-007-9010-6
Central Bank of Nigeria (CBN) Annual Economic Report (2011). Retrieved from https://www.cbn.gov.ng/Out/2012/publications/reports/rsd/arp-2011/Table%20of%20Contents%20and%20Summary.pdf
Central Bank of Nigeria (CBN) Annual Economic Report (2012).
Central Bank of Nigeria (CBN) Annual Economic Report (2013). Retrieved from https://www.cbn.gov.ng/out/2015/rsd/cbn%202013%20annual%20report.pdf
Central Bank of Nigeria (CBN) Annual Economic Report (2014). Retrieved from https://dc.cbn.gov.ng/cbn_annual_report/2/
Central Bank of Nigeria (CBN) Annual Economic Report (2015). Retrieved from https://www.cbn.gov.ng/out/2016/rsd/central%20bank%20of%20nigeria%20annual%20economic%20report%20-%20draft.pdf
Central Bank of Nigeria (CBN) Annual Economic Report (2016). Retrieved from https://www.cbn.gov.ng/Out/2018/RSD/CBN%202016%20ANNUAL%20REPORT_WEB.pdf
Central Bank of Nigeria (CBN) Annual Economic Report (2017). Retrieved from https://www.cbn.gov.ng/out/2018/rsd/cbn%202017%20annual%20report_web.pdf
Central Bank of Nigeria (CBN) Annual Economic Report (2018). Retrieved from https://www.cbn.gov.ng/out/2021/rsd/annual%20report%202018combined.pdf
Central Bank of Nigeria (CBN) Annual Economic Report (2019). Retrieved from https://www.cbn.gov.ng/Out/2020/RSD/CBN%202019%20ANNUAL%20REPORT-FINAL.pdf
Central Bank of Nigeria (CBN) Annual Economic Report (2020). Retrieved from https://www.cbn.gov.ng/out/2023/rsd/2020%20cbn%20annual%20report....pdf
Central Bank of Nigeria (CBN) Annual Economic Report (2021). Retrieved from https://www.cbn.gov.ng/Out/2023/RSD/2021%20CBN%20ANNUAL%20ECONOMIC%20REPORT.a.pdf
Central Bank of Nigeria (CBN) Annual Economic Report (2022). Retrieved from https://www.cbn.gov.ng/Out/2024/RSD/2022%20ANNUAL%20REPORT.pdf
Central Bank of Nigeria (CBN) Annual Economic Report (2023).
Central Bank of Nigeria (CBN). (2023). Statistical Bulletin. Abuja: CBN. Retrieved from https://www.cbn.gov.ng/documents/Statbulletin.html
Chinweze, R. M. (2017). Poverty Reduction in Nigeria: Is Financial Deepening Beneficial? Journal of Economics and Sustainable Development, 8(24), 97-108. Retrieved from https://www.iiste.org/Journals/index.php/JEDS/article/view/40375
Dabwor, T. & Abimiku, A. C. (2016). Poverty incidence in Nigeria: does financial deepening matter? Journal of Economics and International Finance, 8 (6), 56-65. Retrieved from https://doi.org/10.5897/JEIF2015.0693
Dupas, P., & Robinson, J. (2013). Why don't the poor save more? Evidence from health savings experiments in Kenya. American Economic Review, 103(4), 1138–1171. Retrieved from https://www.aeaweb.org/articles?id=10.1257/aer.103.4.1138
EFInA. (2020). Access to Financial Services in Nigeria Survey. Enhancing Financial Innovation & Access. Retrieved from https://efina.org.ng/wp-content/uploads/2022/02/Opportunities-for-promoting-financial-uptake-through-DFS.pdf
Ejemezu, C. I., Nwambeke, G. C., Oko, R. A. & Ibe, S. O. (2023). Review of Financial Deepening as a Panacea to Poverty Eradication in Nigeria: 1986-2020. Journal of Business and Management (IOSR-JBM), 25(11), 21-26. Retrieved from https://www.iosrjournals.org/iosr-jbm/papers/Vol25-issue11/Ser-7/C2511072126.pdf
Gbosi, N. G. (2012) Modern Labour Economics and Policy Analysis 2nd edition Pack Publishers, Ebonyi State, Nigeria.
Gbosi, N. G. (2015). Contemporary Macroeconomic Problems and Stabilization Policies (2nd edition). Spirit and Truth Publishers, Benin City, Nigeria.
George-Anokwuru, C. C. & Inimino, E. E. (2024). Income Inequality and Poverty in Nigeria. International Journal of Economics, Commerce and Management United Kingdom, 12(9), 147-163. Retrieved from https://ijecm.co.uk/wp-content/uploads/2024/09/1297.pdf
Ilo, B. M., Elumah, L. O. & Adelowokan, O. O. (2022). Financial Development and Poverty Alleviation in Nigeria. African Development Finance Journal, 4(1), 119-139. Retrieved from https://www.academia.edu/114286164/FINANCIAL_DEVELOPMENT_AND_POVERTY_ALLEVIATION_A_SYSTEMATIC_REVIEW
Ilori, D. B. (2022). Financial Sector Development and Poverty Reduction Nexus: Evidences from Nigeria. European Journal of Accounting, Auditing and Finance Research, 8(3), 1-12. Retrieved from https://www.eajournals.org/wp-content/uploads/Financial-Sector-Development-and-Poverty-Reduction-Nexus.pdf
Jeanneney, S. G., & Kpodar, K. (2011). Financial Development and Poverty Reduction: Can There Be A Benefit Without A Cost? The Journal of development studies, 47(1), 143-163. Retrieved from https://www.imf.org/en/publications/wp/issues/2016/12/31/financial-development-and-poverty-reduction-can-there-be-a-benefit-without-a-cost-21734
Levine, R. (2005). Finance and growth: Theory and evidence. In P. Aghion & S. Durlauf (Eds.), Handbook of Economic Growth (Vol. 1A, pp. 865–934). Elsevier. Retrieved from https://www.nber.org/system/files/working_papers/w10766/w10766.pdf
McKinnon, R. I. (1973). Money and Capital in Economic Development. Washington, DC: Brookings Institution. Retrieved from https://www.jstor.org/stable/10.7864/jj.17497055
National Bureau of Statistics (NBS) (2020): 2019 Poverty and Inequality in Nigeria: Executive Summary (2019) National Bureau of Statistics Report. Date: May 2020. Retrieved from https://www.nigerianstat.gov.ng/elibrary/read/1092
National Bureau of Statistics (NBS). (2022). National Poverty Index Report. Abuja: NBS. Retrieved from https://www.nigerianstat.gov.ng/elibrary/read/1241254
National Bureau of Statistics (NBS, 2005). Poverty Profile for Nigeria.
National Bureau of Statistics (NBS, 2010). National Bureau of Statistics Annual Data. Retrieved from https://www.nigerianstat.gov.ng/elibrary/read/71
National Bureau of Statistics (NBS, 2020). 2019 Poverty and Inequality in Nigeria: Executive Summary.
National Bureau of Statistics. (2010). National poverty profile for Nigeria: 1980–2010. National Bureau of Statistics. Retrieved from https://www.nigerianstat.gov.ng/pdfuploads/Nigeria%20Poverty%20Profile%202010.pdf
National Bureau of Statistics. (2020). Poverty and inequality in Nigeria: 2020 report. National Bureau of Statistics.
National Bureau of Statistics. (2022). Nigeria poverty and social impact analysis: 2022 report. National Bureau of Statistics
Ndebbio, J. E. U. (2004). Financial deepening, economic growth and development: Evidence from selected sub-Saharan African countries. AERC Research Paper No. 142. Retrieved from https://opendocs.ids.ac.uk/articles/report/Financial_deepening_economic_growth_and_development_evidence_from_selected_sub-Saharan_African_countries/26449837?file=48098464
Nwogwugwu, I. N., & Aja, O. D. (2019). Financial inclusion and access to credit in Nigeria: Challenges and prospects. Journal of Banking and Financial Studies, 3(2), 45–59.
Obunike-Ezeuli, A., Ifionu, E. P., Omojefe, G. O. (2023). Financial Deepening and Poverty Reduction in Nigeria. Central Asian Journal of Innovations on Tourism Management and Finance, 5(1), 160–175. https://doi.org/10.51699/cajitmf.v5i1.698
Odhiambo, N. M. (2010). Is financial development a spur to poverty reduction? Kenya’s experience. Journal of Economic Studies, 37(3), 343–353. https://doi.org/10.1108/01443581011061311
Ozigbu, J. C. & Ezekwe, C. I. (2020). Financial Deepening Process and Dynamics of Economic Development in Nigeria. American Journal of Humanities and Social Sciences Research (AJHSSR), 4(12), 105-112. Retrieved from https://www.ajhssr.com/wp-content/uploads/2020/12/O20412105112.pdf
Patrick, H. T. (1966). Financial development and economic growth in underdeveloped countries. Economic Development and Cultural Change, 14(2), 174–189. https://doi.org/10.1016/B978-0-08-024041-1.50009-0
Raju, J. S. & Yifei, H. (2011). Financial Deepening, Property Rights, and Poverty: Evidence from Sub-Saharan Africa. International Monetary Fund, (IMF Working Paper) WP/11/196, 1-31. https://doi.org/10.5089/9781462305230.001
Shaw, E. S. (1973). Financial Deepening in Economic Development. New York: Oxford University Press. https://doi.org/10.2307/2978421
Todaro, M. P. & Smith, S. C. (2011). Economic Development. Eleventh Edition. Pearson Education Limited, Edinburg. Grate, Harlaw, England. Retrieved from https://www.abebooks.com/9781408284476/Economic-Development-11th-Edition-Todaro-1408284472/plp
Townsend, P. (1979). Poverty in the United Kingdom (Penguin, Harmondsworth).
Townsend, P., Corrigan, P. and Kowarzik, U. (1987). Poverty and Labour in London (Low Pay Unit, London). Retrieved from https://archive.org/details/povertylabourinl0000town
Tubotamuno, B., Inimino, E. E. & Awortu, T. C. (2018). Public Health Expenditure and Poverty in Nigeria. African Journal of Applied and Theoretical Economics, 4(2), 100-126.
Umo, J. U. (2012). Escaping Poverty in Africa. A Perspective on Strategic Agenda for Nigeria. Millennium Text Publishers Limited 14 Science Road, Unilag Estate, Magodo, Isheri, Lagos, Nigeria. Retrieved from https://www.africabib.org/rec.php?RID=410383562
Williams, A. (2016). An Evaluation of Government Policies on Poverty Eradication: A Case Study of NAPEP in Ogbadibo LGA of Benue State. Arabian Journal of Business and Management Review, 6(6), 1-17. https://doi.org/10.4172/2223-5833.1000277
World Bank (2011). World Development Report. New York: Oxford University Press. Retrieved from https://documents.worldbank.org/en/publication/documents-reports/documentdetail/806531468161369474
World Bank (2023). World Development Indicators. Washington, DC: World Bank. Retrieved from https://datatopics.worldbank.org/world-development-indicators/
World Bank. (2011). World development indicators 2011. World Bank. Retrieved from https://documents.worldbank.org/en/publication/documents-reports/documentdetail/245401468331253857
DOI: http://dx.doi.org/10.46827/ejefr.v10i1.2124
Refbacks
- There are currently no refbacks.
Copyright (c) 2026 George-Anokwuru Chioma Chidinma
This work is licensed under a Creative Commons Attribution 4.0 International License.
The research works published in this journal are free to be accessed. They can be shared (copied and redistributed in any medium or format) and\or adapted (remixed, transformed, and built upon the material for any purpose, commercially and\or not commercially) under the following terms: attribution (appropriate credit must be given indicating original authors, research work name and publication name mentioning if changes were made) and without adding additional restrictions (without restricting others from doing anything the actual license permits). Authors retain the full copyright of their published research works and cannot revoke these freedoms as long as the license terms are followed.
Copyright © 2016 - 2026. European Journal of Economic and Financial Research (ISSN 2501-9430) is a registered trademark of Open Access Publishing Group. All rights reserved.
This journal is a serial publication uniquely identified by an International Standard Serial Number (ISSN) serial number certificate issued by Romanian National Library. All the research works are uniquely identified by a CrossRef DOI digital object identifier supplied by indexing and repository platforms. All the research works published on this journal are meeting the Open Access Publishing requirements and standards formulated by Budapest Open Access Initiative (2002), the Bethesda Statement on Open Access Publishing (2003) and Berlin Declaration on Open Access to Knowledge in the Sciences and Humanities (2003) and can be freely accessed, shared, modified, distributed and used in educational, commercial and non-commercial purposes under a Creative Commons Attribution 4.0 International License. Copyrights of the published research works are retained by authors.
