Informal financial services and terrorism financing in Kwara State, Nigeria
DOI:
https://doi.org/10.33003/fujafr-2026.v4i3.395.455-466Keywords:
Terrorism Financing, Informal Financial Services, Financial InclusionAbstract
Purpose: This study investigates the role of informal financial services in terrorism financing in Kwara State, Nigeria. Specifically, this research examines how cash-based informal savings systems, informal credit and lending practices and informal fund transfer and remittance channels affect terrorism financing in Kwara State.
Methodology: The study employed quantitative design and conducted a survey on a sample drawn from across the 16 local governments of Kwara state. Data were analyzed using correlation and multiple regression, following diagnosis of data using Variance Inflation Factor (VIF).
Results and Conclusion: Findings revealed a strong positive causal relationship between the combined independent variables and terrorism financing (R² = 0.551; p=0.000). Specifically, cash-based informal savings systems (ajo/esusu) (β=0.245, p=0.000). informal fund transfer channels (POS and others) (β = 0.224, p = 0.000), and informal credit and lending practices (β = 0.198, p = 0.000) have a positive and statistically significant effect on terrorism financing.
Implication of findings: This study highlights that while informal financial services remain essential for financial inclusion, savings mobilization, and economic development, their informal and cash-based nature exposes them to exploitation for terrorism financing. Therefore, achieving an effective balance between promoting financial inclusion and strengthening regulatory oversight is essential for reducing terrorism financing risks while preserving the socio-economic benefits of informal financial services.
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