Author: Ude Damian Kalu & Chukwunonso S. Ekesiobi
Volume: 57 Issue No:3 Year:2015

Abstract: This paper sets out to investigate and establish the role of microfinance banks in attaining inclusive growth through financial inclusion and poverty alleviation in Nigeria. The study employed utilitarian social welfare function and descriptive statistics to measure the viability of inclusive growth through financial inclusion and poverty alleviation in Nigeria. The study also developed a unified macro measure of inclusive growth, which integrates growth and income distribution into one single measure. Results show that there is low financial inclusion in Nigeria which suggests that financial inclusion in Nigeria plays almost insignificant role to economic growth. Results also show that Nigeria = s economic growth is not inclusive since the core indicators of poverty alleviation are found to be abysmally low. The paper also found that loan-to-deposit ratio and equity index have increased in the last two years. This implies that functional microfinance banks have the potential to alleviate poverty in the foreseeable future. As a result, it is a good strategy of financial inclusion and poverty reduction in Nigeria. It is this study = s believe that if microfinance banks discharge their duties very well by providing the poor with increased self-employment opportunities and making them creditworthy, then the issue of inclusive growth would be a thing of the past.

JEL classification: D63, G21, I32