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Implications of financial development on poverty and inequality: Evidence from Nigeria

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Abstract

This paper examines the short and long run implications of the four measures of financial development on poverty reduction and income inequality in Nigeria within the period 1996-2017. The study employs the Autoregressive distributed lag (ARDL) long run co-integration approach. The results revealed a positive but economic insignificant relationship between financial development, poverty and inequality both in the short and long run. The study further revealed that corruption and inflationary levels exhibited positive effect on poverty reduction and income inequality. These results advocate for an establishment of more bank branches as well as the development of informal/micro financial institutions in the rural areas. Since the result particularly pointed out the significance of the financial institution efficiency and stability has germane to foreign and domestic investment attraction, the government should embark on policies that strengthen the efficiency and stability of the sector. It also recommends that since the control of corruption has been highlighted as a panacea for poverty and inequality reduction, the government should tilt toward policies that would address corruption which is the most important element in institutional quality.

Suggested Citation

  • A. O Olohunlana & R. O. S Dauda, 2019. "Implications of financial development on poverty and inequality: Evidence from Nigeria," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 22(71), pages 42-59, March.
    • Handle: RePEc:rej:journl:v:22:y:2019:i:71:p:42-59
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    Cited by:

    1. Clement Olalekan Olaniyi & James Temitope Dada & Nicholas Mbaya Odhiambo & Xuan Vinh Vo, 2023. "Modelling asymmetric structure in the finance-poverty nexus: empirical insights from an emerging market economy," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(1), pages 453-487, February.
    2. Zameer, Hashim & Shahbaz, Muhammad & Vo, Xuan Vinh, 2020. "Reinforcing poverty alleviation efficiency through technological innovation, globalization, and financial development," Technological Forecasting and Social Change, Elsevier, vol. 161(C).

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    More about this item

    Keywords

    poverty; inequality; financial development;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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