Impact of Fiscal Policy on Financial Inclusion and Development in Nigeria

Authors

Okwanya Innocent, Department of Economics, Federal University of LafiaFollow
Taiwo A. Olusegun, Department of Economics, Federal University of Lafia
Aimua E. Peace, Department of Economics, Federal University of Lafia

Keywords

ARDL, financial development, financial inclusion, fiscal policy, IRF

Abstract

This paper examines the effect of fiscal policy on financial inclusion and development in Nigeria. The study employs the Autoregressive Distributed Lag (ARDL) model and impulse response function (IRF) to determine the extent and response of financial inclusion and development to fiscal policy changes in Nigeria. The study derives a financial inclusion index from three core indicators: access, usage and quality of financial services, while financial development is measured as the ratio of money supply to GDP (M2/GDP). The results show that government expenditure has a significant positive effect on financial inclusion and development, while tax revenue exerts a negative impact. Furthermore, financial inclusion responds more sensitively to changes in government expenditure and tax revenue than financial development. Based on these results, the study recommends fiscal policies that promote financial deepening and foster conducive environment for the growth of financial sector in Nigeria.

Issue

1

Volume

15

First Page

153

Last Page

184

Recommended Citation

Innocent, Okwanya; Olusegun, Taiwo A.; and Peace, Aimua E. (2024) "Impact of Fiscal Policy on Financial Inclusion and Development in Nigeria," CBN Journal of Applied Statistics (JAS): Vol. 15: No. 1, Article 8.
Available at: https://dc.cbn.gov.ng/jas/vol15/iss1/8