EFFECT OF FINANCIAL INCLUSION ON FINANCIAL INTERMEDIATION IN NIGERIA: 2000-2021

Abstract

This study assessed the effect of financial inclusion on financial intermediation in Nigeria
for the period 2000 to 2021. Nigeria financial inclusion strategy has not achieved its target
fully due to some citizens’ preference for cash transactions. The informal sector are
patronized for savings and borrowings hence retarding the fast drive for financial inclusion.
Financial inclusion proxies were automated teller machines per 100,000 adults (ATMs),
commercial bank branches per 100,000 adults (CBB), domestic credit to private sector by
banks as percentage of GDP (DCPS), depositors with commercial banks per 1,000 adults
(DEPCB), while total savings/gross domestic product (TS/GDP) was proxy for financial
intermediation. Specifically, the study assessed the effect of ATMs; CBB; DCPS and DEPCB
on TS/GDP in Nigeria. The data used were extracted from the World Development
Indicators data base and CBN statistical bulletin. The theoretical underpinning was the
financial intermediation theory. The descriptive statistics, unit root test and regression
analysis were done. The results showed that: there was no unit root among the variables,
R-squared was 98% and prob (f-statistic) was 0.00000. Also, the regression output showed
that: ATMs had positive and significant effect on TS/GDP; CBB had negative and nonsignificant effect on TS/GDP; DCPS had positive and significant effect on TS/GDP; while
DEPCB had positive and significant effect on TS/GDP in Nigeria for the period reviewed.
It was recommended that: banks should improve efficiency of ATMs and provide them in
financially excluded locations; CBN / banks to enhance credit delivery to the domestic
private sector and keep sensitizing Nigerians on the need to use the banks for their financial
transactions.