Impact of Digital Finance on Stock Market Performance in Nigeria (2012m1-2021m12)

Abstract

Purpose: The stock market has long played a significant role in fostering economic growth in developing countries by providing equity funds for capital formation. Technological advancements, particularly in digital technology, have significantly influenced financial services, becoming a crucial aspect of financial affairs. Notably, digital payment services have gained prominence in Nigeria, offering potential improvements to the Nigerian stock market. Despite this, there appears to be a perceived gap between digital finance transactions and the performance of the Nigerian stock market. Therefore, this study centred on the impact of digital finance on stock market performance in Nigeria. The study specifically aimed to assess the influence of Automated Teller Machine (ATM), Point of Sales (POS), mobile payment (mobilepay), and web-based payment (webpay) digital finance transactions on stock market capitalization ratio in Nigeria. Methodology: This study, conducted for the period from January 2012 to December 2021, utilized Fully Modified Ordinary Least Squares regression to investigate the impact of digital finance on stock market performance in Nigeria. Monthly secondary data were sourced from the Central Bank of Nigeria's Statistical Bulletin, Statistics and Monthly Economic Reports. Findings and Conclusion: Empirical findings revealed that ATM, POS, mobile-based, and web-based digital finance transactions had a positive and significant impact on the stock market capitalization ratio in Nigeria. Consequently, the study concluded that digital finance contributes to enhancing stock market performance in the country Originality/Value: To promote further growth in the stock market, the study recommends expanding the deployment and usage of digital finance channels such as ATM, POS, mobile-based, and web-based channels, encouraging their utilization for stock market transactions by participants.