MICROFINANCE POLICIES - An Effective tool for Financial Inclusion in Nigeria

Abstract

The importance of financial inclusion as an indispensable tool for poverty alleviation has elucidated a focus on the determinants of financial inclusion. This study examined the effect of selected microfinance policies on financial inclusion in Nigeria. The independent variables were Credits to small scale enterprises, number of microfinance institutions, rural banking and agricultural loans while the dependent variable, financial inclusion was estimated as Depositors with Commercial banks per 1000 adults. The study employed the fully modified ordinary least square regression analysis to analyse time series data covering from 2007 to 2022. Credits to small scale enterprises, number of microfinance institutions, rural banking and agricultural loans had positive effect on financial inclusion in Nigeria. However, the effect of rural banking was insignificant. The study therefore concluded that microfinance policies had significant effect on financial inclusion in Nigeria. The study recommended that Government should consider differential tax rate as incentives to persuade banks to offer more credits to small scale enterprises.