Financial Inclusion, Public Health Expenditure, and Infant Mortality in Nigeria: Evidence from a Toda–Yamamoto Causality Approach

Financial inclusion has become a central policy tool for promoting economic development and improving household welfare in developing countries. However, its direct impact on population health particularly infant mortality remains underexplored in the Nigerian context. Theoretical evidence suggests that improved access to financial services enhances health outcomes by increasing households’ ability to finance medical care, smooth consumption, and manage health shocks. This study examines the causal relationship between financial inclusion and health outcomes in Nigeria. The study employs annual time-series data and applies the Toda–Yamamoto modified Wald causality approach, which allows for robust causality testing without relying on strict assumptions about the order of integration and cointegration. Measures of financial inclusion include bank branch density, deposit account penetration, and formal financial access, while infant mortality serves as the primary health outcome. Preliminary unit-root and lag-length selection tests were conducted, and an augmented VAR in levels was estimated before conducting modified Wald causality tests. The study findings reveal a unidirectional causal relationship from financial inclusion to infant mortalit y , indicating that improvements in financial accessibility significantly reduce infant mortality rates. The results suggest that enhanced financial capability enables households to invest in maternal and child healthcare, improve nutrition, and access preventive medical services. No significant reverse causality was detected from infant mortality to financial inclusion. The study concludes that financial inclusion serves as a key socioeconomic determinant of health outcomes in Nigeria. Strengthening financial inclusion particularly through expanded digital financial services, increased banking penetration, and targeted outreach to underserved populations can contribute meaningfully to improving health indicators such as infant mortality. Policymakers are encouraged to integrate financial inclusion strategies into national public health planning to accelerate progress toward sustainable development goals related to health and well-being.