| By: |
Seck, Ousmane (The Islamic Research and Teaching Institute (IRTI));
Naiya, Ismaeel Ibrahim (Islamic Development Bank, Jeddah, Saudi Arabia);
Muhammad, Aliyu Dahiru (International Institute of Islamic Banking and Finance, Bayero University Kano) |
| Abstract: |
The recent awareness of the important role of finance in economic growth,
development and poverty reduction has stimulated interests of policy makers
and other stakeholders in increasing financial access to vast majority of the
people. Although there are several studies that investigate the effects of
financial inclusion on households both at macro and micro levels, few studies
focus on its impact on welfare of the poor and how to move them out of
poverty. It is noteworthy that there is evidence of voluntary exclusion from
the banking system in Nigeria, with some individuals shunning conventional
banking system due to the prohibition of interest in Islam. Based on the data
of Living Standards and Demographic survey of 2012-2013, this paper
investigates the effect of financial inclusion on the households’ welfare
through consumption in Nigeria. The study employs the approach of panel data
to analyze the effects of financial inclusion on household consumption,
controlling for the endogeneity of the financial inclusion itself. The paper
finds that access to finance has a positive impact on households’ consumption.
This has implication for policy makers and practitioners to provide access to
finance for poverty reduction in the country. Similarly, in addition to
increasing the financial resources available for financing SMEs and
households, Islamic finance could be useful in improving access to finance by
attracting the voluntarily excluded segment of the population by offering them
an alternative form of banking. |
| Keywords: |
Islamic Finance; Financial Inclusion; Nigeria; Household Consumption |
| JEL: |
C26 D10 E21 G02 G21 |
| Date: |
2017–02–20 |
| URL: |
http://d.repec.org/n?u=RePEc:ris:irtiwp:2017_003&r=fle |