Socio-Economic And Demographic Determinants Of Financial Inclusion In Nigeria: Evidence From The Global Findex 2025

Abstract

Despite numerous policy initiatives aimed at increasing financial inclusion, a significant portion of the Nigerian population remains excluded from the formal financial system. This study examines the determinants of financial inclusion in Nigeria, with a focus on demographic and socio-economic factors, as well as the rural– urban disparities in access to formal financial services. Using cross sectional microdata obtained from the World Bank Global Findex database for 2025, the study employs binary logistics models to examine the probability of financial inclusion proxied by formal account ownership, formal savings, and access to formal credit. In addition, a decomposition framework was applied to quantify the contribution of observable characteristics to rural–urban differentials in financial inclusion outcomes. The estimation results indicate that education, income, urban residence, and mobile phone ownership exert positive and statistically significant effects on financial inclusion, employment status is found to have a negative and significant association with formal account ownership, reflecting structural constraints associated with informal sector participation. The rural–urban decomposition results reveal that differences in education, employment status, and mobile phone ownership significantly account for spatial disparities in financial inclusion. The findings suggest that Nigerian financial inclusion policy should combine educational and employment interventions with affordable digital connectivity and targeted rural financial service strategies. Furthermore, policies should focus on income generation and employment opportunities, as well as gender inclusive financial strategies to reduce disparities. The study concludes that addressing both structural and individual-level barriers is essential for achieving sustainable financial inclusion and fostering inclusive economic growth in Nigeria.