IMPACT OF OIL PRICE FLUCTUATION ON FINANCIAL INCLUSION IN NIGERIA
Yusuf Hammed Agboola
Volume 14 Issue 2
Abstract
This study examined the impact of oil price fluctuations on financial inclusion in Nigeria. It specifically investigated the short-run and long-run effects of oil price movements on financial inclusion, while controlling for lending interest rate, exchange rate, inflation rate and GDP growth. The study adopted the Access to Finance theory and employed the Autoregressive Distributed Lag (ARDL) technique to analyse annual time-series data obtained from the World Development Indicators, National Bureau of Statistics and Central Bank of Nigeria. Financial inclusion was proxied by commercial banks' total credit to the private sector. The findings revealed that oil price changes had a positive but statistically insignificant effect on financial inclusion in the short run, but a positive and statistically significant effect in the long run. Exchange rate and inflation rate had positive and significant effects in both periods, while lending interest rate exerted a negative and significant effect. However, GDP growth had no significant effect on financial inclusion in either period. The error correction term was negative and statistically significant, indicating that approximately 36.1% of short-run disequilibrium is corrected annually. The study concludes that oil price fluctuations significantly influence financial inclusion in Nigeria in the long run. It therefore recommends economic diversification, affordable credit facilities and sound macroeconomic policies to strengthen financial inclusion and reduce the economy's vulnerability to oil price fluctuations. Keywords: Oil Price Fluctuation, Financial Inclusion, Commercial Bank Credit, ARDL
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