DETERMINANTS OF FINANCIAL INCLUSION IN NIGERIA – A PROBIT ESTIMATION TECHNIQUE APPROACH

Biliqees Ayoola ABDULMUMIN

Abstract

This study examines the determinants of financial inclusion in Nigeria using probit estimation technique on three models: account ownership, borrow or not to borrow and save or not to save. There was a synergy in the outcome of the estimation in which the study established that financial inclusion is driven by individual-level variables such as gender, age, literacy, income, employment status and documentation as well as that of country-level variables such as information technology, automated teller machine and business freedom. Of these results gender, age, literacy, income, and employment status, as well as that of country-level variables such as information technology, automated teller machine and business freedom, are positively related to financial inclusion in Nigeria. On the other end, documentation, rural and gross domestic product per capita are all negatively related to financial inclusion in Nigeria. From this study, it is recommended that the government should support the expansion of delivery channels by banks that reach out to marginalised and unbanked rural areas, without the increasing banks costs. By this, financial innovations such as agency banking and mobile banking would be established to increase access to financial products by the general populace. The government should also encourage the use of know your customers (KYC) which does not require a lot of documentation or against the anti-money laundering framework, which may be detrimental to the whole financial system. Finally, policies favouring financial inclusion should also be targeted towards women and young people.