Analysis of financial deepening and poverty reduction in Nigeria

Abstract

This study sought to examine the effect of financial deepening on poverty reduction in Nigeria. Secondary data from 1999 to 2019 was extracted from Central Bank of Nigeria statistical bulletin and World Development Indicator. Time series properties of the data was tested with ADF and PP unit root test which was followed by a test of the long run relationship among the variables using Johansen-Juselius cointegration test, and granger causality, and OLS was equally conducted to establish short run relationship among the variables. Findings revealed existence of long run relationship among the variables while OLS revealed a positive and significant relationship of financial deepening with poverty reduction and unemployment rate in Nigeria. Granger Causality Test showed that credit to private sector granger causes improvement in National development. The study concluded that financial deepening if well pursued, will contribute to the reduction in poverty level among the people and engender human development in the country. It is thus argued that the more people have access to financial services, the more their welfare improves. The government should therefore embark on policy thrusts to improve financial deepening and formulate financial reform policies that will have a proportionate beneficial welfare impact on the living conditions of the people.