Impact of Digital Financial Inclusion on Capital Formation in Nigeria

Abstract

This study investigates the impact of digital financial inclusion: digital banking, mobile money, and fintech platforms on capital formation in Nigeria, focusing on investment rates, asset accumulation, savings mobilization, credit access, and business investment. Using a quasi-experimental design with propensity score matching to mitigate selection bias, the research draws on data from 26,930 individuals across Nigeria’s six geopolitical zones, sourced from the Enhancing Financial Innovation and Access Survey, Central Bank of Nigeria, and World Bank Global Findex Database. Findings indicate that all digital financial inclusion components significantly boost capital formation, with fintech platforms showing the strongest impact, followed by mobile money and digital banking. Notably, women, rural populations, and lower-income groups experience disproportionate benefits. The study highlights how digital financial services enhance capital formation through reduced transaction costs, improved credit allocation, and enhanced savings mobilization, fostering economic development and inclusive growth by prioritizing underserved populations.

Keywords: capital formation; digital banking; financial inclusion; fintech platforms; mobile money