Financial Inclusion, Monetary Policy and Poverty Level in Nigeria

Abstract

This study examined the effect of financial inclusion and monetary policy on poverty level in Nigeria for the period of 1986-2015 using ARDL approach to cointegration. It was evident from the result that financial inclusion and monetary policy had impact on poverty level depending on how financial inclusion or monetary policy is measured. However, it was also observable from the result that economic growth had not transcended to the poor in form of improved standard of living rather it had fostered what could be referred to as vicious cycle of poverty in Nigeria. Also, loans and advances to SMEs by deposit money bank (LASME) had expected effect on poverty level both in the short and long run in Nigeria. The study concluded that only the financial inclusion proxied by loans and advances to SMEs by deposits money banks (LASME) had a desirable effect on poverty level, while an increase in deposits to rural branches of deposit money banks (DRB) impoverished the poor rural dwellers in Nigeria. Hence, the effect of money supply (MS) may not be efficiently rendered with the associated high inflation rate which frequently had adverse effect on the poor populace.