Exploring Multidimensional Financial Inclusion and Manufacturing Firms Performance in a Developing Country: The Case of Nigeria

African Governance and Development Institute WP/16/043

28 Pages Posted: 14 Nov 2016

See all articles by Uchenna Efobi

Uchenna Efobi

Covenant University

Belmondo Tanankem

Ministry of Economy, Planning and Regional Development - Department of Analysis and Economic Policies

Simplice Asongu

African Governance and Development Institute

Ibukun Beecroft

Covenant University

Date Written: November 11, 2016

Abstract

This study used the matching technique to explore the impact of financial inclusion on the performance of manufacturing firms in Nigeria. Most studies that have considered financial inclusion have largely focused on household access to the services of financial institutions, but have inadvertently under-explored the impact on the performance of firms, especially in developing countries like Nigeria. On the one hand, financial inclusion is measured using a multidimensional measure, which includes (i) firms having between 20-40 percent of their working capital financed through borrowing from the bank; (ii) firms having an overdraft facility to finance their operation and (iii) firms having a line of credit or loan from a financial institution. On the other hand, firm performance is measured using the lag total annual sales value of the firm in local currency unit. From the matching estimation, we find that whereas firms perform better with the aid of access to bank services, the extent differs in relation to the type of access they have. We interpret these results as showing that financial deepening increases firms’ performance only dependent on the type of financial inclusion that is being observed.

Keywords: Financial Inclusion; Manufacturing Firms; Development; Nigeria

JEL Classification: D60; E25; G20; I30; O55

Suggested Citation

Efobi, Uchenna and Tanankem, Belmondo and Asongu, Simplice and Beecroft, Ibukun, Exploring Multidimensional Financial Inclusion and Manufacturing Firms Performance in a Developing Country: The Case of Nigeria (November 11, 2016). African Governance and Development Institute WP/16/043. Available at SSRN: https://ssrn.com/abstract=2868227 or http://dx.doi.org/10.2139/ssrn.2868227

Uchenna Efobi

Covenant University ( email )

P.M.B. 1023
Km 10 Idiroko road
Ota, Ogun State 234
Nigeria
+48036273494 (Phone)

Belmondo Tanankem

Ministry of Economy, Planning and Regional Development - Department of Analysis and Economic Policies ( email )

Cameroon

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Ibukun Beecroft

Covenant University ( email )

Canaanland
Km 10 Idiroko road
Ota, 24001
Nigeria
+2348135537772 (Phone)

HOME PAGE: http://covenantuniversity.edu.ng/Profiles/Beecroft-Ibukun#.U-orX5F0U6U

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