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Banking Innovation, Financial Inclusion and Economic Growth in Nigeria

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Abstract

The paper examined the impacts of financial inclusion and banking innovation on economic growth in Nigeria using monthly and quarterly data from 2009 to 2021. The paper expanded the frontier of knowledge by adopting a monthly and quarterly approach using mixed data sampling (MIDAS) and autoregressive distributed lag (ARDL) to ascertain the level of consistency of the impact of financial inclusion and banking innovation on economic growth and identify the banking channel which has the strongest impact on economic growth. Data on the variables were sourced from 2021 editions of the Central Bank of Nigeria Statistical Bulletin and the World Development Indicator. The findings showed that financial inclusion and banking innovation channels such as ATM and mobile transactions had a positive impact on economic growth across the ARDL and MIDAS approaches. The impact of the value of POS and web transactions was also significant, but their results were not consistent across the two techniques, while the value of cheque transactions does not impact economic growth using the ARDL approach. The results also showed that the value of POS transactions had the strongest impact on economic growth, followed by ATM, mobile, and web transactions respectively. As a result of these findings, the paper concluded that financial inclusion and banking sector innovations have an important role to play in fostering economic growth in Nigeria. Finally, the paper is unique as it is the first to compare the consistency of findings across the MIDAS and ARDL approach on the study objectives.

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Authors and Affiliations

  1. Department of Economics, Obafemi Awolowo University, Ile-Ife, Osun State, Nigeria

    Olajide Oyadeyi

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  1. Olajide Oyadeyi
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Appendices

Appendix 1

Fig. 1
figure 1

The normality test

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Appendix 2

Table 11 Correlogram of Residuals
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Oyadeyi, O. Banking Innovation, Financial Inclusion and Economic Growth in Nigeria. J Knowl Econ (2023). https://doi.org/10.1007/s13132-023-01396-5

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