EFFECT OF FINANCIAL INCLUSION STRATEGIES ON PROFITABILITY OF DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This study examined the effect of financial inclusion strategies on deposit money bank’s profitability. The study period covered from 2012 to 2023 while data collected was analysed using autoregressive distributed lag (ARDL). The independent variables of the study (the financial strategies) were estimated as- agricultural loans, credits to small scale business, and rural banking; while, the dependent variable- Bank profitability, is measured as Return on Equity (ROE). The findings from the long run cointegrated equation indicated a significant effect of a combination of all financial inclusion strategies understudied in the short run, however, only credits to small scale enterprises exerted a significant and positive relationship with profitability of deposit money banks in Nigeria. Agricultural loan and rural banking did not have such significant effect. The study therefore recommended a greater focus on enabling credits to small scale enterprises by eliminating barriers and bottlenecks in approval and disbursement of such loans.