Effect of Financial Inclusion on Financial Performance of Microfinance Banks in Nigeria

Abstract

The purpose of this study was to investigate how financial inclusion affects Nigerian microfinance institutions' financial performance spanning 2012 - 2022. The study specifically looked at the combined effects on return on asset (ROA) of the number of deposit accounts, rural bank branches, and loans and advances. The study used the ex post facto research design. The top ten (10) microfinance banks by capital base were the subject of the study. The Central Bank of Nigeria provided the data. The study used panel regression models, which include both random and fixed factors. The study's findings demonstrated that loans and advances, rural bank branches, and the quantity of deposit accounts all significantly and favorably affect return on assets. The study came to the conclusion that financial inclusion is a viable panacea for improving financial performance of microfinance banks in Nigeria. From the findings and conclusion, the study recommended that Microfinance banks should intensify efforts in getting more people to open accounts through banking outreach and relax stringent requirements for account opening. More bank branches should also be opened especially in the rural areas in order to give financial access to the poor rural dwellers. Microfinance banks should expand their network of branches, helping to bring finance services available and affordable to people, especially in remote and rural areas.