Financial inclusion and macroeconomic drivers of sustainable development in Nigeria evidence from ARDL ECM and SVAR with moderation

This study examines the dynamic relationship between financial inclusion, macroeconomic drivers, and sustainable development in Nigeria using annual data spanning 1990–2024. An integrated ARDL–ECM framework, complemented by Structural Vector Autoregression (SVAR) for shock analysis, is employed to capture long-run relationships, short-run dynamics, and adjustment processes. The results indicate that access to financial services and credit to the private sector are positively and significantly associated with sustainable development, while inflation exerts a negative influence. Gross capital formation contributes positively to long-run development outcomes. Moderation analysis reveals that GDP per capita strengthens the impact of financial inclusion on sustainable development, whereas population growth weakens the effectiveness of private credit. The error-correction term is negative and statistically significant, indicating stable long-run convergence following short-run shocks. SVAR impulse responses and variance decomposition further show that financial inclusion and its interaction with income levels account for a substantial share of development variability, while inflation shocks exhibit persistent adverse effects. Overall, the findings highlight the importance of aligning financial inclusion strategies with macroeconomic stability and demographic conditions to support sustainable development in Nigeria and similar emerging economies.