FINANCIAL INCLUSION AS A PANACEA FOR INCOME INEQUALITY IN NIGERIA.

Given the perception that financial inclusion is a critical tool for the eradication of income inequality, this paper investigates its impact on income inequality in Nigeria via three financial variables: depth, access and stability. The study adopts the Autoregressive Distributed Lag (ARDL) methodology on selected variables from 1981 to 2021. The study found that in the short run, financial stability shows a negative impact which is not statistically significant on inequality, while financial depth has a statistically significant (10%) positive effect. Also, standard of living has a statistically significant (1%) negative impact on inequality while economic growth reveals a statistically significant (1%) positive effect. However, in the long run, financial stability shows a positive and insignificant effect on inequality whereas both financial access and economic growth have positive and significant effect. Also, while financial depth has negative and insignificant effects on inequality, standard of living has a negative but significant effect. This study recommend that financial inclusion should focus mainly on the financially excluded while the government should create incentives for private financial institutions to extend their services and activities towards the rural dwellers and those who are likely to benefit more from their services. [ABSTRACT FROM AUTHOR]