Effects of Monetary Policy on Financial Inclusion: An Empirical Evidence from Nigeria

Abstract

The study conducted an empirical analysis on the effects of monetary policy on financial inclusion in Nigeria from 1985 to 2019. The study employed time series research design and data were collected from the secondary source via CBN statistical bulletin. The study used autoregressive distance lag(ARDL) to achieve the objective of the study. The findings indicated that lending rate has a negative and insignificant effect on number of bank branches; money supply has a positive effect but insignificant effect on credit to SMEs; and liquidity ratio has a positive but insignificant effect on bank demand deposit. Therefore, the study concluded that monetary policy does not have significant effect on financial inclusion in Nigeria from 1985 to 2019. The study recommended that Central Bank of Nigeria as a monetary authority should redirect and redesign its monetary policy tools towards determining the financial inclusion system in the country in order to capture citizens that are financial excluded.

Keywords

• lending rate
• money supply liquidity ratio
• bank branches
• credit to smes
• bank demand deposit