Effects of Agency Banking on Financial Inclusion in Nigeria

Abstract

This study aims to investigate the limitation of the empirical evidence of agent banking, mobile money operators and financial inclusion in Nigeria. For the purpose of this study, a descriptive research design was used. The study population were operators of agency banking and mobile money services located in Benin City and environs. Primary data was gathered through structured questionnaires. Test-retest technique was employed to determine the internal consistency of the instruments by computing Cronbach’s alpha. A Cronbach’s alpha of 0.619 and above was taken as acceptable reliability. Linear regression was used to analyse the data to determine, if agency banking, mobile money operations had a significant relationship with financial inclusion and to indicate the relative strength of the independent variables on the dependent variables. Findings revealed that, that cybercrime and reduction of cost of banking services had a statistically insignificant and negative relationship with financial inclusion, while geographical coverage and illiquidity had a positive, but insignificant relationship with financial inclusion. This study concludes, that agent banking and mobile money is gaining wide acceptance, however this has not engendered, more financial inclusion. This study recommends, that the government should create an appropriate regulatory context in which innovation can thrive. In addition, more coordination is required between banks and operators, in terms of Risk, Training, deployment of technology, cash movement and profit sharing arrangements.

Keywords: Agency Banking, Financial inclusion, Technology, Regulatory Agencies, Performance Indicators.