FINANCIAL DEEPENING AND POVERTY IN NIGERIA

<p>This paper examined the influence of financial deepening on poverty reduction in Nigeria from 1981 to 2022. To achieve the above objective, secondary data on poverty incidence, private sector credit as a ratio of GDP in %, broad money supply as a ratio of GDP in %, inflation rate and monetary policy rate were collected from the statistical bulletin published by Nigeria's central bank and bureau of statistics. The Autoregressive Distributed Lag - ARDL method was used as the main tool to analyze the data. The ARDL Bounds test showed that there is a long-term connection between the above mentioned variables. In addition, the results showed that both in the long run and short run, private sector credit as a ratio of GDP in % has a mitigating influence on poverty incidence. Meanwhile, broad money supply as a ratio of GDP in % has a detrimental influence on poverty incidence, although significant in the short run. Regarding the control variables, this study discovered in the short run a significant positive influence of monetary policy rate and inflation rate on poverty incidence in Nigeria during the period of study. The result indicated that inflation and high monetary policy rate are consistently detrimental for the poor. But in the long run, monetary policy rate has a significant positive relationship with poverty incidence. However, inflation rate has a significant negative relationship with poverty incidence. The estimation suggested that financial deepening has a potential to reduce poverty in Nigeria. That is, if financial deepening is well pursued, it will contribute to the reduction in poverty incidence in Nigeria. Therefore, this study recommended the need to foster an expansion in credit to the private sector to reduce poverty in Nigeria. The government should start working on policies that will help make the financial system stronger and create new financial reforms. These policies should help improve the quality of life of people in Nigeria in a fair and meaningful way. </p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0830/a.php" alt="Hit counter" /></p>