Al-Hikmah University Journal

Different Governments all over the world are making concerted efforts towards poverty reduction amongst its populace and financial inclusion has been identified as one of the instruments to fight poverty. This study explored the short and long-run impacts of financial inclusion on poverty reduction in Nigeria, using Autoregressive Distributive Lag Model on a time series data spanning from 1985 to 2019, which were sourced from the Central Bank of Nigeria Statistical Bulletin. The findings obtained from ARDL revealed the long-run nexus between financial inclusion and poverty reduction. The short-run results demonstrated that the lending deposit ratio has a negative and statistically significant effect on poverty reduction in Nigeria whereas, loan to rural areas, bank branches, and lending to deposit ratios show a positive effect on poverty reduction, but not statistically significant except loan to rural area. Thus, the study recommended that monetary authority should ensure that there are adequate bank branches and continuous granting of loan facilities to the people in order to facilitate their businesses. Finally, the facility should be affordable to the low-income earners, and easy distribution channel should be guaranteed.