Does Access to Finance Reduce Poverty? Evidence from Katsina State

Abstract

Enhancing access to formal financial services especially credit to the rural populace has been identified as a means of
reducing poverty in developing countries. This paper investigates whether access to financial services reduces poverty in Nigeria
focusing specially on rural areas. A cross-sectional primary data was generated using a structured questionnaire administered
on randomly selected respondents from rural areas of Katsina state. The study used multinomial logit model in examining the
relationship, and the study found a negative relationship between poverty level and access to financial services. The study
concludes that promoting access to formal financial services increases the level of income of the rural dwellers and thus a
retarding effect on the level of poverty in the rural areas.