Financial Literacy and Information Asymmetry in Nigeria

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 (CBN) and National Bureau of Statistics (NBS) 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.