Fintech Growth and Its Impact on Bank Profitability in Nigeria

EKPUKE; Dean Evwies; EHIEDU; Victor C; PhD

doi:10.56201/ijefm.v10.no9.2025.pg380.395

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Fintech Growth and Its Impact on Bank Profitability in Nigeria

EKPUKE, Dean Evwies, and EHIEDU, Victor C, PhD

Abstract

This study investigates the impact of fintech growth on the profitability of Nigerian banks. Fintech activity was proxied by total e-payment value (FVALUE), total fintech funding (FFUND), and fintech startup growth (FGROW), while bank profitability was measured through the liquidity ratio (LIRAT). Annual data from 2015 to 2023 was obtained from Central Bank of Nigeria e-Payment Statistics, NIBSS report, Disrupt Africa and Statistical report. The study employed descriptive statistics, correlation analysis, Granger causality, multicollinearity diagnostics, heteroscedasticity tests and ordinary least squares (OLS) regression. The findings reveal that fintech value, measured by transaction volumes, has a statistically significant and positive effect on bank liquidity, highlighting the importance of digital payment adoption in strengthening bank profitability. Conversely, fintech funding and startup growth exert negative but statistically insignificant effects, suggesting that capital inflows and the number of fintech firms do not independently enhance bank liquidity within the study period. The Granger causality results indicate a unidirectional causality from bank liquidity to fintech funding, and from e-payment value to fintech funding, underscoring the interdependence between banks’ financial soundness and fintech investment flows. Diagnostic tests confirm the robustness of the results. The study concludes that fintech growth enhances Nigerian banks’ profitability mainly through transaction value creation, rather than through startup expansion or funding. It recommends stronger bank fintech collaboration, targeted regulatory support for value-driven fintech models, and efficient allocation of fintech funding towards scalable innovations that complement banking operations.

Keywords

Fintech growthe-payment valuefintech fundingliquidity ratiobank profitability

References

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Fintech Growth and Its Impact on Bank Profitability in Nigeria

Abstract

Keywords

References

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