Financial inclusion and economic growth of Nigeria (the microfinance option)

The main focus of this study is to establish the relationship between financial inclusion and economic growth with particular reference of microfinance option for the period 1992 to 2013. Using Ordinary Least Square method and employing the Johansen Cointegration tests the study revealed that the activities of microfinance as one of the financial inclusion strategy significantly contribute to economic growth. While total loans and advances of microfinance banks significantly contribute to economic growth, total deposits inversely affect economic growth. The study also established the presence of long-run relationship between the variables considered (GDP, total loans and advances, total deposits, investments and number of microfinance banks) The study reveals that the growth and development of a nation is significantly dependent on the expansion of banking and financial services to the currently financially-excluded class of citizens of the country, as they possess untapped and unexplored valuable potentials that will be of tremendous to the country. In view of the benefits inherent in financial inclusion, this study recommends that microfinance banks should concentrate efforts on low cost deposits which are in line with their operations than competing with the conventional banks in mobilizing fixed deposits that has higher cost attached to it. Financial education is also recommended to enlighten the public on benefits of a financial superstructure