Distributive effects of digital risks and digital infrastructure on financial inclusion in Nigeria: insights from quantile regression

Purpose Despite advancements in mobile technology, Fintech innovation and regulatory reforms, many Nigerians, especially in rural and low-income communities, remain excluded from the digital financial ecosystem. Additionally, rising digital risks (including cybercrime, online fraud, etc.) and poor digital infrastructure continue to erode users’ trust and exacerbate inequality. Whereas there is a growing policy interest in digital finance, there exists limited empirical evidence on digital risks (DRI) and digital infrastructure (DIF) impacts on financial inclusion (FI) across various levels. This study aims to explore DRI and DIF impacts on FI across different access levels in Nigeria, from 2000 to 2024. Design/methodology/approach To achieve this study’s main goal, both Simultaneous Quantile Regression (SQR) and Method of Moments Quantile Regression (MMQR) were used to assess the distributional influence of DFI and DRI on FI in Nigeria. In addition, the principal component analysis (i.e. PCA) was adopted to develop (or construct) composite indexes for DIF, DRI and FI. Findings The results of both SQR and MMQR estimations disclose that DIF fosters FI, while DRI dampens FI across all levels. Furthermore, DIF and DRI impacts vary across FI levels. DIF exerts a greater positive influence at the middle (or 50th) quantile, suggesting that improvements in DIF are most effective in moderately inclusive systems. Conversely, DRI shows more pronounced adverse effects at the lower (25th) quantile, indicating that greater DRI hurts financially less developed segments (or units). Research limitations/implications Although it focuses primarily on Nigeria, the study unravels the significance of minimizing DRI and strengthening digital security, including expanding DIF to enhance users’ trust in (and access to) financial services, to promote FI. Originality/value To the best of the authors’ knowledge, this study is the first attempt to assess the distributional influence of both DRI and DIF on FI in Nigeria.