Electronic Payment Systems Implementation and the Performance of Commercial Banks in Nigeria

Abstract

This research paper investigated the effect of electronic payment systems on the performance of commercial banks in Nigeria. For the purpose of the study, data was collected from secondary sources specifically from the CBN statistical bulletin and comprised of data on the assets base of commercial banks and internet banking (ATM, POS, Internet banking and Mobile banking) for the period of 2009 to 2019. The collected data was analyzed using ordinary least square (OLS) regression technique. Findings of the research showed that there is a statistically significant positive relationship between ATM transactions and the assets base of commercial banks in Nigeria. Internet (online) banking transactions had a positive relationship with the asset base of commercial banks. There is a positive and statistically significant relationship between mobile banking transactions and the assets base of commercial banks. However, Point of Sales (POS) transactions had a negative statistical relationship with the asset base of banks. From the findings of the study, It is concluded that implementation of electronic payment system in banks have had mixed effect on the performance of banks. Thus, while ATM, internet banking and mobile banking leads to improvements in the performance of banks, same cannot be said for point of sales machines which has a negative effect on bank performance. Based on the above, it is recommended that commercial banks increase investments in the implementation of electronic payment systems. Finally, it is recommended that the government improve on internet infrastructure in order to capture the rural areas in order to promote financial inclusion through electronic banking in the country.

Effect of Information and Communication Technology on Financial Performance of Deposit Money Banks in Nigeria

“…The result once more validate the prediction of CCEx theory on the importance of co-investment, co-invention, but do little to emphasise the effect of ICT externalities. The finding of the study with respect to the effect of POS and IB is consistent with the result of Muotolu and Nwadialor (2019) and contrast the result of several researches researchers (Abaenewe et al, 2013;Frank & Binaebi, 2019;Muia, 2017;Valahzaghard & Bilandi, 2014;Zu et al, 2019). Similarly, the weak negative effect of ACD observed in this study is consistent with the study of Mensah (2016).…”

“…The study found that POS have a strong positive effect on financial performance, while MB have a strong negative effect. The strong positive effect of POS is similar to what is observed in earlier researches (Frank & Binaebi, 2019;Mohammed et al, 2022;Nwakoby et al, 2020;Orji et al, 2018). The strong negative effect of MB is discovered by studies conducted on banks in Ghana and Asia (Boateng & Nagaraju, 2020;Vijayalakshmi & Jayalakshmi, 2019).…”

“…According to most earlier research works (Akwam & Yua, 2021;Frank & Binaebi, 2019;Mohammed, Ibrahim, & Muritala, 2022;Muhoro & Mungai, 2018;Nwakoby, Okoye, Ezejiofor, Anukwu, & Ihediwa, 2020;Orji, Ogbuabor, Okon, & Anthony-Orji, 2018) on the subject of ICT usage and financial performance. There has been a significant favourable influence of ICT on bank financial performance in Nigeria.…”

Cashless Banking and Performance of Deposit Money Banks

“…The implication is the PoS does not affect the ROA of commercial banks in Nigeria. This finding supports recent studies in Nigeria by Mu-otolu et al (2019); Frank and Binaebi (2019); Obiekwe and Anyanwaokoro (2017); Christian and Igwebuike (2016); and Ugwueze and Nwezeaku (2016). On the other hand, this finding disagrees with studies of Nwakoby et al (2020); Okafor (2020); Akara and Asekome (2018) and Alagh and Emeka (2014) that reported a significant but positive relationship between the PoS and ROE of banks in Nigeria.…”

Effects of Internet Banking on Growth of Access to Loans of Deposit Money Banks in Nigeria

“…To examine how internet banking affect growth of access to loans of deposit money banks in Nigeria the study adapted Frank and Binaebi (2019) model which is stated as follow: 𝐹𝑃 = 𝑓 (𝐴𝑇𝑀, 𝑃𝑂𝑆, 𝐼𝑁𝑇𝐸𝑅𝑁𝐸𝑇, 𝑀𝑂𝐵𝐼𝐿𝐸)…”