The Impact of Digital Banking on Financial Inclusion in Nigeria (2000-2022)

Abstract

This paper examines the impact of digital banking on financial inclusion in Nigeria from 2000 to 2022. The objectives of the study focuses on the effects of digital banking adoption, the regulatory environment, internet access, financial literacy, and income levels. The estimation techniques employed include the Johansen co-integration and error correction model. The Johansen co-integration analysis reveals two co-integrating equations at the 5% significance level, indicating long-run relationships between factors influencing financial inclusion in Nigeria, specifically Digital Banking Adoption (DBA), Regulatory Environment (REG), Internet Access (INT), Financial Literacy (FL), and Income Levels (INC). The F-statistic (41.74294) and its significance confirm that the independent variables collectively explain a substantial variation in financial inclusion. The findings show that digital banking adoption, regulatory frameworks, internet access, financial literacy, and income levels significantly influence financial inclusion in Nigeria. The paper concludes that digital banking, supported by regulatory frameworks, internet access, financial literacy, and income levels are essential for enhancing financial inclusion, with a multi-faceted approach needed to foster sustainable economic growth and reduce inequality in Nigeria. Based on the findings, the paper recommends that the government focus on enhancing digital banking, refining regulations, expanding internet access, promoting financial literacy, and addressing income inequality to improve financial inclusion in Nigeria.