Financial Deepening and Poverty Reduction in Nigeria

This study investigates the relationship between financial deepening and poverty reduction in Nigeria from 1994 to 2022. Using an Autoregressive Distributed Lag (ARDL) model Financial Inter-Relation Ratio (DFIR) and Finance Ratio (FRT) demonstrate negative relationships with MPI, suggesting that enhanced interconnections and relative growth in the financial sector can lead to poverty reduction. The ARDL long-run result shows that; The Ratio of Money to National Income (MNI) shows a positive relationship, signalling potential adverse effects on poverty, warranting careful policy considerations. The small positive coefficient of the Financial Accessibility Ratio (FAC) emphasizes quality over quantity in financial access. Interest Margin (NIM) was found to have a positive and significant impact, stressing the importance of efficiency and competition within the financial sector. Based on the findings, the study recommended that financial institutions and policymakers should develop and implement long-term strategies focusing on financial deepening to ensure sustainable poverty reduction. Recognize financial deepening as a central policy pillar in national development planning.