The impact of banking and capital market financial inclusion on economic development in Nigeria

Abstract

The study investigates the relationship between financial inclusion and economic development in Nigeria between 2003 and 2020 using the human development index (HDI) and variables from banking and the capital market. A separate model was specified for each of the industries in the financial sector. The econometric techniques employed include the ADF unit root test, ARDL bounds test, and Error correction model. The summary of the findings indicates the existence of a long-run relationship between HDI and capital markets inclusion, while there is no relationship recorded between banking inclusion and HDI. Secondly, the short-run models show that there is a relationship between HDI and capital market inclusion, while there is a negative relationship between HDI and banking inclusion. The study recommends the drafting of a comprehensive financial inclusion plan in the country among others.