Does Financial Development Reduces Poverty Level in Nigeria? (1980-2020)

Abstract

Abstract This study investigated the effect of financial development on poverty level in Nigeria. This paper deviated from extant studies by adopting a more robust measures of financial development which disaggregated into three for in-depth analysis sourced from International Monetary Fund’s, International Financial Statistics database making the overall financial development index (FD) as baseline model to serve as key independent variable while indices of financial institution (FI) and financial market (FM) served as key independent variables for robustness checks. These were with a view to do in-depth analyses to establishing which index of financial development reduces poverty level in Nigeria covering the period between 1980 and 2020. The result of the overall financial development index and poverty level is statistically significant and positively related (t = 3.3583, p < 0.05) Also, a negative and statistically insignificant relationship was established between financial institution index and poverty level (t = -1.3725, p > 0.05) while a statistically insignificant positive relationship was established between financial market index (t = 0.3785, p > 0.05) and poverty level. The study therefore concludes that poverty level could only be reduced when financial development is promoted in Nigeria.