ADSU International Journal of Applied Economics, Finance and Management

Impact of Financial inclusion and Poverty Reduction on Economic Growth in Nigeria: A Structural VAR Approach

Abstract

Financial inclusion is the process that ensures access, usage and availability of the formal financial system to all members in an economy. It is important to have an all-inclusive financial system to facilitate the allocation of resources, which reduces the cost of capital. The study examined the impact of financial inclusion and poverty reduction on economic growth in Nigeria from 1981 to 2020. The unit root test indicated that real gross domestic product, commercial bank branch, money supply and poverty rate are stationery at first difference.The SVAR result shows that money supply has a positive shock impact on real gross domestic product in Nigeria. Commercial bank branch has a positive shock impact on real gross domestic product in Nigeria. Poverty rate has a negative impact on real gross domestic product in Nigeria. The study recommends that Government should increase its effort for pursuing financial inclusion as it is not only helping to have economic growth as espoused in literature, but also effectuates stabilization policy (monetary policy) in Nigeria.