Financial Inclusion, Financial Deepening and Real Sector Growth in Nigeria: An Empirical Analysis

Abstract:

This study examined the nexus between financial inclusion, financial deepening and real sector growth. Time series data from Central Bank of Nigeria (CBN) statistical bulletin for 33 years were used to measure the link between the variables mentioned. The study tested for stationarity using the Phillip and Perron test. To test for Granger and Long run Causality effect as a result of the time series data used, the ARDL and the Error Correction Model were used. The ARDL model was used to estimate both the long run and short run dynamics after establishing the existence of a co integrated series with the bound testing technique. The study found that financial inclusive growth and financial deepening do not significantly increase real sector growth. It therefore recommends a review of the monetary policies of Nigeria to encourage extension of micro-credit to the unbanked and extreme poor especially in rural communities who are the growth agents of the real sector.