Does financial inclusion matter for poverty reduction in Nigeria: Evidence from savings and credit mobilization components

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Type of article: Research Article

Abstract
Poverty remains a pressing challenge in developing economies, an necessitating analysis of financial and macroeconomic drivers of poverty reduction. Financial inclusion, particularly through access to savings and credit, has gained prominence as a pathway for households to build resilience, smooth consumption, and invest in productive ventures. This study examines the short-run and long-run effects of savings and credit from deposit money banks (DMBs) and microfinance banks (MFBs) on poverty reduction in Nigeria, with poverty headcount as the dependent variable. The Autoregressive Distributed Lag (ARDL) model was employed, using time-series data obtained from reputable national and international organizations. Findings show that DMB savings significantly reduce poverty in both the short run (coefficient = 0.0077, p = 0.0389) and long run (–0.0393, p = 0.0036), emphasizing their role in mobilizing resources that enhance household welfare. DMB credit also reduces poverty in the short run (0.0031, p = 0.0005) and demonstrates marginal long-run significance (0.0199, p = 0.0914), reflecting its contribution to productive opportunities. By contrast, MFB savings show only weak short-run significance (–0.0059, p = 0.0799) and no long-run effect (–0.0393, p = 0.2366), while MFB credit remains insignificant in both the short run (0.0025, p = 0.3973) and long run (0.0155, p = 0.5222). The study recommends that DMBs should extend short-term savings benefits into long-term poverty reduction and sustain credit facilities. MFBs should improve savings mobilization through government-backed incentives and restructure credit with lower rates, flexible repayment, and financial literacy to strengthen their poverty-reduction role.

Acknowledgment
We appreciate Landmark University for providing the platform and funding for this research work. We appreciate your involvement.

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    • Table 1. Unit root stationarity test
    • Table 2. ARDL estimation of the impact of savings in deposit money banks and microfinance banks on poverty headcount
    • Table 3. ARDL estimation of the impact of credit in deposit money banks and microfinance banks on poverty headcount
    • Conceptualization
      Oladipo Adenike, Ben-Caleb Egbide, Sunday Festus Olasupo, Onaolapo O. Ogunsola, Olakunle A. Adepoju
    • Data curation
      Oladipo Adenike, Joseph U. Madugba, Onaolapo O. Ogunsola, Tolulope J. Ipindola, Olakunle A. Adepoju
    • Formal Analysis
      Oladipo Adenike, Sunday Festus Olasupo, Joseph U. Madugba
    • Funding acquisition
      Oladipo Adenike, Ben-Caleb Egbide, Sunday Festus Olasupo, Joseph U. Madugba, Onaolapo O. Ogunsola, Tolulope J. Ipindola, Olakunle A. Adepoju
    • Methodology
      Oladipo Adenike, Joseph U. Madugba
    • Project administration
      Oladipo Adenike, Ben-Caleb Egbide, Sunday Festus Olasupo, Onaolapo O. Ogunsola, Tolulope J. Ipindola
    • Validation
      Oladipo Adenike, Ben-Caleb Egbide, Onaolapo O. Ogunsola
    • Visualization
      Oladipo Adenike, Joseph U. Madugba, Tolulope J. Ipindola, Olakunle A. Adepoju
    • Writing – original draft
      Oladipo Adenike, Olakunle A. Adepoju
    • Resources
      Ben-Caleb Egbide, Sunday Festus Olasupo, Joseph U. Madugba, Onaolapo O. Ogunsola, Tolulope J. Ipindola, Olakunle A. Adepoju
    • Supervision
      Ben-Caleb Egbide, Sunday Festus Olasupo, Joseph U. Madugba
    • Writing – review & editing
      Ben-Caleb Egbide, Sunday Festus Olasupo, Joseph U. Madugba, Onaolapo O. Ogunsola, Tolulope J. Ipindola
    • Investigation
      Sunday Festus Olasupo, Tolulope J. Ipindola, Olakunle A. Adepoju
    • Software
      Sunday Festus Olasupo, Joseph U. Madugba, Onaolapo O. Ogunsola, Olakunle A. Adepoju