Does Financial Inclusion Matter to Bank Performance? Evidence from Nigeria


Does Financial Inclusion Matter to Bank Performance? Evidence from Nigeria

Augustine Ujunwa

West African Monetary Institute, Accra, Ghana (

Ifeoma Betty Ezike Monetary Policy Department, Central

Bank of Nigeria Angela Ifeanyi Ujunwa

Department of Banking and Finance University of Nigeria, Enugu Campus


The Banking sector is crucial to the economic development of a country due to its role in financial intermediation. The process of financial intermediation involves channeling resources from the surplus

savings units of the economy to the deficit investing units to ensure the funding of viable economic activities. In practice, not everybody in an economy has access to the services provided by the formal financial system, such as savings, deposits, insurance, credits, investment, and other ancillary activities. The exclusion could be because of several factors including illiteracy, poverty or lack of assets, technology, geographical location, and other debilitating socio-economic circumstances. Illiteracy and the perceived cumbersome documentation requirements of financial service providers had in the past been discriminatory against potential participants and clients of the financial services industry. Also, the development and application of technology in the provision of banking, insurance and stock broking and other financial services by the operators had in many cases resulted to the exclusion of the poor and others who do not have access to such technologies. In recent times, these developments have led to concerns about the fate of those excluded from the financial system and the potential economic loss because of such exclusion. Policy makers are, therefore, increasingly interested in strategies to ensure financial inclusion in the economy. Financial inclusion is expected to enhance the operations and profitability of the banks by expanding the client base to reach the poor. The aim of this paper is, therefore, to empirically investigate the effect of financial inclusion on the performance of the banks in Nigeria. The Broad objective of the study is to investigate the effect of financial inclusion on bank performance in Nigeria. The specific objectives, however, are to: ascertain the effect of financial service penetration on bank performance; establish the effect of usage of financial services on bank performance; and determine effect of financial service availability on bank performance.

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