Banking concentration negatively affects financial inclusion in Nigeria by increasing the cost of financial services and limiting access for the unbanked population, as large, concentrated banks can leverage their market power to charge higher spreads and interest rates. A concentrated banking sector leads to a less competitive environment, discouraging banks from operating in less profitable, remote, or underdeveloped areas where inclusion efforts are most needed
Banking concentration in Nigeria means a few large banks control most of the financial sector. This often limits financial inclusion, as these banks focus more on urban and profitable clients while rural and low-income populations remain underserved. High concentration also reduces competition, keeping banking costs higher and access more difficult. As a result, many people rely on informal financial services, slowing overall financial inclusion in the country.