Electronic Financial Services and Bank Performance in Nigeria
Abstract
This research looks at how digital banking channels affect profitability and liquidity as well as how electronic financial services affect the performance of Nigerian commercial banks. In particular, the study looked at how digital lending, web payment, mobile banking (electronic payment), and ATM transactions affected bank performance. The financial statements of mentioned commercial banks for 2023 and the Statistical Bulletin of the Central Bank of Nigeria (CBN) were used as sources of data for this cross-sectional panel analysis. We used multiple regression models to examine the relationship between log values of monetary transactions from each electronic banking channel and liquidity and profit after tax. With fixed effects estimates used in the panel data methods, the best-fitting model was found using the Hausman test at a significance level of 5%. The results showed that electronic banking services accounted for 71.3% of the variance in profit after tax and 77.4% of the variance in liquidity. In particular, after-tax profit and liquidity were positively correlated with ATM, POS, and mobile payments, but negatively correlated with web payments. While electronic fund transfers improved liquidity, they had a negative impact on earnings. Research shows that online payment systems might need some work, but overall, electronic banking channels do a great job of improving banks' performance. To improve their financial performance even further, banks should optimise other digital platforms and put money into a safe and efficient web payment infrastructure.
References
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