ABSTRACT

This study examined financial inclusion and economic growth in Nigeria within the sample period from 1980 to 2018. The broad objective of the study was to examine the impact of financial inclusion and economic growth in Nigeria. The methodology ofthe study was the cointegration and vector error correction approach. The variables used in the study include; money supply ratio to GDP (M2/GDP), Credit to Private Sector (CPS/GDP), and liquidity ratio (LQR), Loans deposit ratio (LDR)as the explanatory variables while gross domestic product (GDP)was employed as the dependent variable. These Data on these variables were sourced from the Central Bank of Nigeria (CBN) statistical bulletin volume 29, 2018. The unit root result revealed that none of the variables were stationary at level, but at first differencing, all the variables became stationary. The Johansen Cointegration test revealed that there is a long run relationship among the variables employed in the study. The result of the VECM showed indicates that there is a positive relationship between economic growth and money supply ratio to GDP (M2/GDP). Equally, the result indicates a negative relationship between Credit to Private Sector and also the relationship between Liquidity Ratio and Loans deposit ratio on economic growth were not statistically significant. The R2 shows that 82% of the changes in the dependent variable, are as a result ofthe changes in the explanatory variable. The result of the Breusch-Godfrey Serial Correlation LM Test shows that there is no serial correlation in the model. The granger causality test shows that there is a unidirectional relationship between monetary policy and economic growth. Therefore, the research recommends that; government should also provide enabling environment and the needed security that will ensure the long-term growth and efficient performance of the bank. Financial education is also recommended to enlighten the public on benefits of a financial superstructure.