FINANCIAL INCLUSION, MACROECONOMIC STABILITY, AND ITS MACROECONOMIC IMPLICATIONS IN NIGERIA

Abstract

Financial inclusion enhances economic growth because it helps to allocate financial resources in an optimal way, expand opportunities to invest, and enhance financial stability. In Nigeria, the lack of access to formal financial services by households has reduced their welfare and productive investment, which prevents sustainable economic development. The paper will examine the financial inclusion determinants and how they influence economic growth in the years 1990- 2023 based on secondary data provided by the Central Bank of Nigeria Statistical Bulletin and it will be done using an Error Correction Model. Empirical evidence reveals that interest rates have a negative influence on financial inclusion, economic growth has a positive influence on financial inclusion and financial inclusion has a positive influence on economic growth meaning it is a stimulant in economic growth. The results indicate that macroeconomic stability, regulatory reform and digital financial services play a key role in financial inclusion as well as policy implications in lowering the cost of borrowing, broadening financial infrastructure, and instilling confidence in the financial system in the citizens.