DIGITAL FINANCIAL INCLUSION AND ECONOMIC DEVELOPMENT IN NIGERIA

ABSTRACT From 2002 to 2024, the study examined the effects of digital financial inclusion (automated teller machine (ATM) penetration, bank account ownership, bank branch penetration, and secure internet servers) on GDP per capita, income inequality, poverty rate, and Human Development Index (HDI). The study used time-series data from the Central Bank of Nigeria Statistical Bulletin and an ex post facto research design. The varied order of integration of the variables led to the use of the Autoregressive Distributed Lag (ARDL) bounds testing approach. The Finance-Growth Theory, the Technology Acceptance Model, and the Technological Advancement Theory served as the foundation for the study. The findings of the ARDL limits test showed no cointegration between income inequality and the other variables, generated equivocal results for GDP per capita, and verified long-term cointegrating correlations between the HDI and the poverty rate. Over time, ATM prevalence and bank account ownership had a favorable impact on HDI, however bank branch penetration had a negative impact. Although correction was incredibly slow (ECM = -0.0684, p = 0.0919), ATM penetration was the only meaningful long-term poverty-reducing proxy (coefficient = -0.3967, p < 0.001). Income inequality was not significantly impacted by digital financial inclusion (F-statistic = 1.98). Due to lagged dependent variables, the R2 values, which varied from 93.06% to 99.83%, are partially mechanical. The study comes to the conclusion that while digital financial inclusion has little impact on GDP per capita and no influence on income inequality, it does favorably contribute to human development and the alleviation of poverty. Increasing rural digital infrastructure, improving financial literacy initiatives, cutting transaction costs, bolstering consumer protection, and putting tailored interventions for marginalized people into practice are among the recommendations.