Chapter One — 1.1 Background to the Study

In recent years, Interest Rate Volatility has emerged as a critical factor shaping financial inclusion of rural dwellers across organizations operating in and around Lagos State. As institutions grapple with the pressures of globalization, regulatory reform, and shifting stakeholder expectations, understanding how interest rate volatility relates to financial inclusion of rural dwellers has become an important area of both scholarly and practical concern.

Lagos State presents a useful setting for examining this relationship precisely because the conditions there — structural, regulatory, and behavioural — differ from those typically assumed in the broader literature, most of which draws on evidence from more developed economies.

1.2 Statement of the Problem

While interest rate volatility is widely discussed in policy and industry circles, empirical evidence on its actual effect on financial inclusion of rural dwellers within Lagos State remains sparse and, in places, contradictory. This lack of localized, rigorous evidence makes it difficult for decision-makers to know with confidence whether current approaches to interest rate volatility are helping or hindering financial inclusion of rural dwellers — a gap this study sets out to close.

1.3 Objectives of the Study

1. To examine the effect of Interest Rate Volatility on financial inclusion of rural dwellers in Lagos State.
2. To assess the extent to which interest rate volatility influences financial inclusion of rural dwellers within the study area.
3. To identify the challenges associated with interest rate volatility in relation to financial inclusion of rural dwellers.
4. To recommend strategies for optimizing interest rate volatility in order to improve financial inclusion of rural dwellers.

1.4 Research Questions

1. What is the effect of interest rate volatility on financial inclusion of rural dwellers in Lagos State?
2. To what extent does interest rate volatility influence financial inclusion of rural dwellers within the study area?
3. What challenges are associated with interest rate volatility in relation to financial inclusion of rural dwellers?
4. What strategies can be adopted to optimize interest rate volatility in order to improve financial inclusion of rural dwellers?

1.5 Significance of the Study

This study is significant to a range of stakeholders. For policymakers and regulators, the findings offer evidence to guide the design of frameworks that support healthier outcomes around financial inclusion of rural dwellers. For managers and practitioners within Lagos State, the study provides practical insight into how interest rate volatility can be better managed. Finally, it contributes to the academic literature on finance / banking by extending existing knowledge into a specific empirical context, and offers a reference point for future researchers.

1.6 Scope of the Study

The study is limited to an examination of Interest Rate Volatility and its relationship with financial inclusion of rural dwellers within the context of Lagos State. It reflects a PhD-level scope of analysis and relies on data and perspectives available within that scope; generalizing the findings beyond this specific context should therefore be done with appropriate caution.