Financial Inclusion and Resilience to COVID-19 Economic Shocks in Nigeria

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Date
2023-12-13
Authors
Adeniran, Adedeji P.
Muthinja, Moses M.
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African Economic Research Consortium
Abstract
We examine the role of financial inclusion, ownership of bank accounts, and previous use of formal financial saving facilities as a resilience factor in the effect of COVID-19 on households' welfare in Nigeria. Using a novel data set that tracks food security among families in Nigeria before and during COVID-19, we find a negative effect of COVID-19 on welfare. The impact is more severe among male-headed households, those living in the southern region of Nigeria, and lower educated households. We also test how financial inclusion mitigates this effect through a triple difference analysis in which the households that are financially included and in non-agricultural sector are considered as the treatment group. Financial inclusion did not support resilience to shock among non-agricultural homes. Given the magnitude and multisectoral dimension of the COVID-19 shock, financial inclusion was not enough to mitigate the effect. This, therefore, points to a role for stronger government support in a large shock like COVID-19.
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