Financial Literacy and Information Asymmetry in Nigeria

Enang; Enomfon Thompson; Etim; Utibe Daniel

doi:10.56201/ijefm.v11.no7.2026.pg1.18

📄 Download Paper

Financial Literacy and Information Asymmetry in Nigeria

Enang, Enomfon Thompson, Etim, Utibe Daniel

Abstract

In this study, the researchers examine the effect of financial literacy and information asymmetry in Nigeria, with a view to determining how financial knowledge influences access to financial information, decision-making, and participation in the financial system. Financial literacy has become increasingly important in promoting sound financial decisions, reducing market inefficiencies, and improving economic welfare. However, information asymmetry remains a major challenge in Nigeria's financial sector, where unequal access to accurate and timely financial information often leads to poor investment decisions, adverse selection, moral hazard, and financial exclusion among individuals and businesses. The researchers adopt a quantitative research approach using secondary data obtained from relevant publications of the Central Bank of Nigeria and National Bureau of Statistics for the period of 2004-2023. Data were analyzed using descriptive statistics and econometric techniques to determine the extent to which financial literacy influences information asymmetry. Findings revealed that, higher levels of financial literacy significantly reduce information asymmetry by improving individuals' ability to access, interpret, and utilize financial information effectively. Findings further showed that, government expenditure on education and commercial bank enrollment have positive but insignificant effect on interest rate spread in Nigeria. While secondary school enrollment had a positive and significant effect on interest rate spread in Nigeria. It was concluded from the findings of this study that, sustained investment in financial literacy programmes, supported by government agencies, financial institutions, and educational institutions, is essential for reducing information asymmetry and fostering inclusive economic growth. It was recommended from the findings of this study that, the expansion of nationwide financial education initiatives, improved disclosure standards, wider adoption of digital financial literacy programmes, and stronger regulatory frameworks to ensure equitable access to financial information across all segments of the Nigerian economy. Key Words: Financial, Literacy, Information and Asymmetry.

Keywords

FinancialLiteracyInformation and Asymmetry.

References

Adetunji, O. M., and David-West, O. (2019). The relative impact of income and financial literacy on financial inclusion in Nigeria. Journal of International Development, 31(4):312-335. Akerlof, G. A. (1970). The market for lemons: Quality uncertainty and the market mechanism. Quarterly Journal of Economics, 84(3): 488-500. Albert, O. A., Adegboye, A. A., and Akinwale, Y. O. (2025). ICT-driven financial literacy and household enterprise development in Nigeria. African Journal of Information Systems, 17(2): 45-63. Ali, P. I., and Awopetu, S. O. (2020). Financial literacy and financial inclusion in Nigeria: Evidence from household survey data. International Journal of Economics and Financial Issues, 10(4):312-320. Bojuwon, M., Olaleye, B. R., and Ojebode, A. (2023). Financial inclusion and financial condition: The mediating effect of financial self-efficacy and financial literacy. Vision: The Journal of Business Perspective, 27(4):1-15. Central Bank of Nigeria. (2023). Statistical bulletin. Central Bank of Nigeria. Hastings, J. S., Madrian, B. C., and Skimmyhorn, W. L. (2013). Financial literacy, financial education, and economic outcomes. Annual Review of Economics, 5(3): 347-373. Ikue, N. J., Sodipo, J. A., Magaji, L. M., Amabuike, I. L., Ofuru, B., Enegesi, L. B., Musa, A. U., Adamu, K. U., and Nura, M. (2022). Investigating the influence of financial literacy, socioeconomic and demographic factors on saving behaviours of Nigerians. International Journal of Finance & Banking Studies, 11(2): 1-15. Kolade, O., Orekoya, I., and Adeniyi, A. (2022). Determinants of financial literacy and its effects on the financial behaviour of undergraduates in a Nigerian university. Journal of Economics and Behavioral Studies, 14(3):30-45. Lusardi, A., and Mitchell, O. S. (2007). Financial literacy and retirement preparedness: Evidence and implications for financial education. Business Economics, 42(1): 35-44. Lusardi, A., and Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52(1): 5- 44. Mitchell, O. S., and Lusardi, A. (2015). Financial literacy and economic outcomes: Evidence and policy implications. Journal of Retirement, 3(1):107-114. OECD. (2020). OECD/INFE 2020 international survey of adult financial literacy. OECD Publishing, 22. Organisation for Economic Co-operation and Development. (2020). OECD/INFE 2020 international survey of adult financial literacy. OECD Publishing, 23. Oseifuah, E. K. (2010). Financial literacy and youth entrepreneurship in South Africa. African Journal of Economic and Management Studies, 1(2):164-182. Ozili, P. K. (2024). Determinants of financial inclusion in Nigeria: The monetary policy and banking sector factors. Journal of Financial Regulation and Compliance, 3(2):165-188. Sakanko, M. A., David, J., Anyanwu, S. O., Yelwa, M., and Gamal, A. A. M. (2025). The financial literacy and financial inclusion linkage: Evidence from Niger State of Nigeria. Studies of Applied Economics, 43(3):1-18. Schultz, T. W. (1961). Investment in human capital. American Economic Review, 51(1):1-17. Sharimakin, A. O. (2025). Access to and use of financial services for household investment: Micro-analytical evidence from Nigeria. International Journal of Business and Emerging Markets, 17(3): 300-325. Spence, M. (1973). Job market signaling. Quarterly Journal of Economics, 87(3): 355-374. Stiglitz, J. E. (1975). The theory of screening, education, and the distribution of income. American Economic Review, 65(3):283-300. Stiglitz, J. E., and Weiss, A. (1981). Credit rationing in markets with imperfect information. American Economic Review, 71(3):393-410. Van Rooij, M., Lusardi, A., and Alessie, R. (2011). Financial literacy and stock market participation. Journal of Financial Economics, 101(2): 449-472.

Financial Literacy and Information Asymmetry in Nigeria

Abstract

Keywords

References

More Articles from INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT