Informatics Publishing Limited

Oginni Simon Oyewole ¹, El-Maude ¹, Jibreel Gambo ¹, Mohammed Abba ¹, Michael Ezekiel Onuh ²

Affiliations
1 Department of Accountancy, Modibbo Adama University of Technology, Yola, NG
2 Department of Accountancy, Kogi State University, NG

Abstract

Technological advancement has provided efficient and effective payment system devoid of ‘cash and carry syndrome’. Specifically, electronic payment system provides a medium through economic exchanges take place without visiting brick and mortal banks or with no physical presence of the transacting parties. While electronic payment system enjoys prominence in Nigeria, evidence of its contribution to economic growth has not been empirically established. Meanwhile, the current transition to cashless economy was essentially based on the prominence of e-payment system. Therefore, this study, for the first time, explored relationship between e-payment system and economic growth as means of reviewing current transition to cashless economy in Nigeria. Data was analysed using OLS and TSLS methods covering period of 7years (2005-2012). The result indicates a significant positive relationship between e-payment system and economic growth in term of real GDP per capita and trade per capita. Only ATMs was found to positively contribute to economic growth while other e-payment channels contribute negatively. Hence, current cashless policy should be tailored towards effective e-payment system and other factors which bear much relevance on successful transition to cashless economy should be prioritized.

Keywords

Cashless Economy, e-Payment, Cash-Based System, Economic Growth.

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Oginni Simon Oyewole ¹, Mohammed Abba ¹, El-maude ¹, Jibreel Gambo ¹, Arikpo ¹, I. Abam ¹

Affiliations
1 Department of Accountancy, Modibbo Adama University of Technology, Yola, NG

Abstract

The resultant of technological innovation has been the transformation in operational dimension of banks over some decades. Internet technology has brought about a paradigm shift in banking operations to the extent that banks embrace internet technology to enhance effective and extensive delivery of wide range of value added products and services. However, the fact that e-banking is fast gaining acceptance in Nigerian banking sector does not assuredly signify improved bank performance nor would conspicuous use of internet as a delivery channels make it economically viable, productive or profitable. Whether progression is made in the use of internet technology (e-banking) or not, there should be parameter to empirically assess its impact over specified period of adoption. Consequently, the study examined the impact of electronic banking on banks’ performance in Nigeria. Panel data comprised annual audited financial statements of eight banks that have adopted e-) and retained their brand name banking between 2000 and 2010 as well as macroeconomic control variables were employed to investigate the impact of e-banking on return on asset (ROA), return on equity (ROE) and net interest margin (NIM). Result from pooled OLS estimations indicate that e-banking begins to contribute positively to bank performance in terms of ROA and NIM with a time lag of two years while a negative impact was observed in the first year of adoption. It was recommended that investment decision on electronic banking should be rational so as to justify cost and revenue implications on bank performance.

Keywords

Bank Performance, Electronic Banking, Internet Technology.

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