The impact of financial inclusion on monetary policy in Nigeria

By Mbutor O. Mbutor, Ibrahim A. Uba. 2013

147 citations recorded by the source corpus.

Financial inclusion is currently hot topic in policy spheres because of its potency in encouraging economic growth. And because it improves the sensitivity of aggregate demand to interest rate it has been argued to be useful for the success of monetary policy. However, little attention has been devoted to computing the exact effect of financial inclusion on monetary policy. This paper presents a simple model showing the impact of financial inclusion on monetary policy in Nigeria between 1980 and 2012. The result of the study supports the notion that growing financial inclusion would improve the effectiveness of monetary policy. However, the coefficient of the number of bank branches has the wrong sign and this is explained by the fact that, in opening branches, banks mainly pursue profits but not financial inclusion which is a policy objective, so that there are clusters of branches which are under-utilized while numerous locations which are considered not favourable for balance sheets are under-branched. Key words: Financial inclusion, monetary policy, economic.

Subfields: Accounting, Economics and Econometrics, Urban Studies

View Paper: https://www.semanticscholar.org/paper/3f5521160b67c883307b0ff2c6a77eb91f74a30e

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Citations in the corpus

Financial regulation and financial inclusion in Sub-Saharan Africa: Does financial stability play a moderating role? (2020, background): “Financial inclusion has usually been measured by one variable such as the number of bank branches per thousand adults, the number of depositors with commercial banks per thousand adults and the number of ATMs per hundred thousand adults (see Mbutor and Uba, 2013; Evans, 2016).”
Does financial inclusion affect monetary policy in SAARC countries? (2016, background): “Financial inclusion also controls actively controls the price level in an economy by controlling the rate of inflation (Mbutor & Uba, 2013; Ray & Pravu, 2013).”
Financial Inclusion and Economic Growth in Nigeria (2015, background): “Mbutor and Uba (2013) presented a simple model showing the impact of FI on monetary policy in Nigeria between 1980 and 2012.”