Interrogating the Dynamic Links Among Financial Inclusion, Domestic Investment and Economic Growth in Nigeria

Abstract

The study has interrogated the dynamic links among financial inclusion, domestic investment and economic growth in Nigeria using quarterly data from 2010Q1 to 2024Q4. The study was anchored on the theoretical foundations of the finance-led growth theory. The employed the Structural Vector Autoregressive (SVAR) to analyse the data. Findings of the study revealed a positive pass-through effect of financial inclusion to economic growth through domestic investment in Nigeria. The study concluded that financial inclusion impacts positively on domestic investment and domestic investment in turn, impacts positively on economic growth in Nigeria. Thus, there is a pass-through mechanism from financial inclusion to economic growth through domestic investment in Nigeria. Based on these findings, the study made the following recommendations. In order to promote higher domestic investment and economic growth in Nigeria through financial inclusion, digital financial infrastructure should be strengthened; financial access should be expanded in rural areas; affordable credit access to small and medium enterprises should be provided by financial institutions. The government and financial institutions should aggressively pursue financial and digital literacy and enhance the financial regulatory frameworks in the country.