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Abstract
The study employed the augmented Granger causality test approach developed by Toda and Yamamoto (1995) to investigate the causal link between financial development and poverty reduction in Nigeria between 1981 and 2020 using secondary data. Two different measures of financial development namely ratio of broad money supply and private sector credit to GDP were used to capture the different channels through which finance affects poverty reduction. The study found that when monetization variable i.e. ratio of broad money supply to GDP was used as proxy there was a unidirectional causality running from financial development to poverty reduction indicating that ratio of broad money supply to GDP granger caused reductions in poverty incidence in Nigeria. However, when ratio of private sector credit to GDP was used as proxy the result showed a no causality relationship between financial development and poverty reduction suggesting that private sector credit did not contribute to poverty reduction within the period under review. The study therefore recommended the need to further deepen the financial sector in Nigeria through innovations, improved financial instruments and infrastructures, adequate regulation and supervision that will encourage the expansion and improvement of financial services in the form of payment and saving vehicle affordable to the less privileged