The Role of Microfinance Institutions in Financial Inclusion in Nigeria (2004-2022)

Abstract

The research examined the role of microfinance banks in financial inclusion in Nigeria from 2004 to 2022.  Using time series data collected from the Central Bank of Nigeria's Statistical Bulletin, the study analyzed the effects of explanatory variables (Microfinance Bank Deposit, Microfinance Bank Credit and Microfinance Banks Investments) on the dependent variable (Credit to Private Sector). The Auto Regressive Distributed lag models (ARDL) was employed for the analysis, which indicated that while microfinance banks variables had a positive effect on financial inclusion, it was insignificant within the study period. The study recommends that Microfinance banks (MFBs) should intensify their outreach programs to rural and underserved urban areas. MFBs should seek to increase their capital base through partnerships, government support, or issuing equity. MFBs should diversify their range of financial products to include more savings options, insurance products, and digital financial services. MFBs should invest in digital banking platforms and mobile money services.