The study examines the effect of payments system innovations on the performance of commercial banks in Nigeria, Ex post factor research design was adopted for the study. The population of the study comprises all the banks operating in Nigeria. Data were collected from the economic reports and statistical bulletin of central bank of Nigeria. The Auto-Regressive Distributed Lags (ARDL) bounds approach to co-integration was adopted on quarterly time-series data from Q1 2007 to Q4 2020 to test the causal relationship between payments system innovations and financial performance of commercial banks in Nigeria. The results indicated that mobile payment, POS transactions and internet payment have positive and significant impact on return on assets of commercial banks in Nigeria, while RTGS has negative impact on the return of assets. The results of the study will fill the knowledge gap and will benefit both regulators and operators in making decision-making process and development of new policies that will aid the promotion of innovative products for safe reliable, and credible payments system and in identify payments system technology, projects and initiatives that are significantly viable, respectively. The study recommends the need for the commercial banks in Nigeria to undertake massive mass media enlightenment campaigns on all payments system innovations/initiatives.
KeywordsReal Time Gross SettlementMobile PaymentPoint-of-Sale TerminalInternet Payment and Return on Assets
Abaenewe, Z. C., Ogbulu, O. M., & Ndugbu, M. O. (2013). Electronic Banking and Bank Performance in Nigeria. West African Journal of Industrial and Academic Research, 6, 171-187.
Adaramola, A. O., & Kolapo, F. T. (2019). Assessment of Bank Technology Machine and Mobile Banking as Market Strategies to Raising Performance of Banks in Nigeria. Journal of Economics and Behavioral Studies, 11, 108-115. https://doi.org/10.22610/jebs.v11i3(J).2873
Agarwal, S., Khapra M., Uchat N., & Menezes, B. (2007). Security Issues in Mobile Payment Systems. In Proceedings of the 5th International Conference on E-Governance (pp. 142-152).
Ahrens, T., & Chapman, C. S. (2006). Doing Qualitative Field Research in Management Accounting: Positioning Data to Contribute to Theory. Handbooks of Management Accounting Research, 1, 299-318. https://doi.org/10.1016/S1751-3243(06)01011-X
Akhisar, I., Tunay, K. B., & Tunay, N. (2015). The Effects of Innovations on Bank Performance: The Case of Electronic Banking Services. Procedia-Social and Behavioral Sciences, 195, 369-375. https://doi.org/10.1016/j.sbspro.2015.06.336
Akwam, P. O., & Yua, H. (2021). Effect of Financial Products on the Performance of Selected Deposit Money Banks in Nigeria: 2005-2019. European Journal of Accounting, Auditing and Finance Research, 9, 124-143.
Anselm Ngwa, N. (2020). Electronic Banking Transactions and Their Effects on the Performance of Selected Commercial Banks in Cameroon. Research Journal of Finance and Accounting, 11, 107-115.
Ayodele, T. D. (2014). Electronic banking in Nigeria: Challenges and prospects. Elixir International Journal of Finance management, 69, 22912-22915.
Bingilar, P. F., & Bariweni, B. (2019). Electronic Payment Systems Implementation and the Performance of Commercial Banks in Nigeria. European Journal of Business and Management Research, 4, 1-5. https://doi.org/10.24018/ejbmr.2019.4.5.112
BIS (Bank for International Settlement) (2006). Committee of Payment and Settlement Systems, General Guidance for National Payments System Development.
BIS (Bank for International Settlement) (2021). Covid-19 Accelerated the Digitalization of Payments. CPMI Red Book Statistics; OECD Main Economic Indicators and National Accounts.
Boateng, K., & Nagaraju, Y. (2020). The Impact of Digital Banking on the Profitability of Deposit Money Banks: Evidence from Ghana. International Journal of Research in Finance and Management, 3, 144-150.
CBN (Central Bank of Nigeria) (2013). CBN Briefs 2012-2013 Editor. Central Bank of Nigeria.
CBN (Central Bank of Nigeria) (2017) CBN Bullion 1976-2016 (Vol. 1-40). Central Bank of Nigeria.
Cherotich, K. M., Sang, W., Mutungú, C., & Shisia, A. (2015). Financial Innovations and Performance of Commercial Banks in Kenya. International Journal of Economics, Commerce and Management, 3, 1242-1265.
Cirasino, M., & García, J. A. (2008). Measuring Payment System Development. Payment Systems Policy and Research, Financial Infrastructure Series, World Bank.
Creswell, J. W., & Creswell, J. D. (2018). Research Design: Qualitative, Quantitative, and Mixed Methods Approaches (5th ed.). Sage Publications.
Davis, F. D. (1989). Perceived Usefulness, Perceived Ease of Use, and User Acceptance of Information Technology. MIS Quarterly, 13, 319-340. https://doi.org/10.2307/249008
Dong, J., Yin, L., Liu, X., Hu, M., Li, X., & Liu, L. (2020). Impact of Internet Finance on the Performance of Commercial Banks in China. International Review of Financial Analysis, 72, Article ID: 101579. https://doi.org/10.1016/j.irfa.2020.101579
Dormant, D., & Lee, J. (2011). The Chocolate Model of Change. Lulu. com.
ECB (European Central Banks) (2010). The Payment System. Payments, Securities and derivatives, and the Role of the Eurosystem, 2010. European Central Banks.
Frank, B. P., & Binaebi, B. (2019). Electronic Payment Systems Implementation and the Performance of Commercial Banks in Nigeria. European Journal of Business and Management Research, 4, Article No. 5. https://doi.org/10.24018/ejbmr.2019.4.5.112
Guo, Y., & Liang, C. (2016). Blockchain Application and Outlook in the Banking Industry. Financial innovation, 2, Article No. 24. https://doi.org/10.1186/s40854-016-0034-9
Humphrey, D. B., Willesson, M., Bergendahl, G., & Lindblom, T. (2006). Benefits from a Changing Payment Technology in European Banking. Journal of Banking and Finance, 30, 1631-1652. https://doi.org/10.1016/j.jbankfin.2005.09.009
Ibrahim, U. A. & Mohammed, Z. (2020). Assessing the Impact of Capital Market Development on Economic Growth: Evidence from Nigeria. IOSR Journal of Economics and Finance, 11, 1-15.
Kamboh, K. M., & Leghari, M. E. J. (2016). Impact of Cashless Banking on Profitability: A Case Study of Banking Industry of Pakistan. Paradigms, 10, 82-93.
Kelvin, O. (2012). Mobile Money for Financial Inclusion. Journal of Macro Finance, Africa, Nett, Lagos, 4, Article No. 14.
Kerlinger, P., & Lein, M. R. (1986). Differences in Winter Range among Age-Sex Classes of Snowy Owls Nyctea Scandiaca in North America. Ornis Scandinavica, 17, 1-7. https://doi.org/10.2307/3676745
Lin, B. W. (2007). Information Technology Capability and Value Creation: Evidence from the US Banking Industry. Technology in Society, 29, 93-106. https://doi.org/10.1016/j.techsoc.2006.10.003
Mahboub, R. M. (2018). The Impact of Information and Communication Technology Investments on the Performance of Lebanese Banks. European Research Studies Journal, 21, 435-458. https://doi.org/10.35808/ersj/1133
Malaguti, M. C. (2015). Payment System Regulation for Improving Financial Inclusion. Center for Global Development.
Mertens, D. M. (2019). Research and Evaluation in Education and Psychology: Integrating Diversity with Quantitative, Qualitative, and Mixed Methods. Sage Publications.
Mesagan, E. P., & Shobande, O. A. (2016). Role of Apex Banks: The Case of Nigerian Economy. Journal of Economics and Business Research, 22, 171-186.
Moris, F. A. (1996). Semiconductors: The Building Block of the Information Revolution. Monthly Labor Review, 119, 6-17.
Morufu, O. (2016). E-Payments Adoption and Profitability Performance of Deposits Money Banks in Nigeria. IPASJ International Journal of Information Technology, 4, 1-9.
Muhoro, D. I., & Mungai, J. (2018). Real Time Gross Settlement and Financial Performance of Commercial Banks in Kenya. International Academic Journal of Economics and Finance, 3, 110-122.
Muia, S. W. (2017). The Effect of Financial Innovations on Financial Performance of Commercial Banks in Kenya. Doctoral Dissertation, Kca University. http://41.89.49.13:8080/xmlui/handle/123456789/1243
Muisyo, J. M., Alala, O., & Musiega, D. (2014). The Effects of Mobile Money Services on the Performance of the Banking Institutions: A Case of Kakamega Town. Transactions, 354(16,700,000), 4-600.
Muotolu, P. C., & Nwadialor, E. O. (2019). Cashless Policy and Financial Performance of Deposit Money Banks in Nigeria. International Journal of Trend in Scientific Research and Development, 3, 465-476. https://doi.org/10.31142/ijtsrd23835
Nwakoby, N. P., Okoye, J. N., Ezejiofor, R. A., Anukwu, C. C., & Ihediwa, A. (2020). Electronic Banking and Profitability: Empirical Evidence from Selected Banks in Nigeria. Journal of Economics and Business, 3, 637-649. https://doi.org/10.31014/aior.1992.03.02.227
Nwankwo, O., & Eze, O. R. (2013). Electronic Payment in Cashless Economy of Nigeria: Problems and Prospect. Journal of Management Research, 5, 138-151. https://doi.org/10.5296/jmr.v5i1.2650
Nwankwo, S. N., & Agbo, E. I. (2021). Effects of Electronic Banking on Commercial Bank Performance in Nigeria. European Journal of Accounting, Finance and Investment, 7, 68-81.
Okafor, C. A. (2020). Cashless Policy for Business Purpose and the Performance of Deposit Money Banks in Nigeria. International Journal of Innovative Finance and Economics Research, 8, 1-13.
Onay, C., & Ozsoz, E. (2013). The Impact of Internet-Banking on Brick and Mortar Branches: The Case of Turkey. Journal of Financial Services Research, 44, 187-204. https://doi.org/10.1007/s10693-011-0124-9
Orji, A., Ogbuabor, J. E., Okon, A. N., & Anthony-Orji, O. I. (2018). Electronic Banking Innovations and Selected Banks Performance in Nigeria. The Economics and Finance Letters, 5, 46-57. https://doi.org/10.18488/journal.29.2018.52.46.57
Osang, F. B. (2017) E-Banking: Evaluating Electronic Payment Channels in Southern Nigeria. NOUN Journal of Physical and Life Sciences, 1, 135-157.
Phillips, D. C., & Burbules, N. C. (2000). Postpositivism and Educational Research. Rowman & Littlefield.
Rogers, G. F. C. (1983). The Nature of Engineering: A Philosophy of Technology. Macmillan International Higher Education. https://doi.org/10.1007/978-1-349-06683-4_6
Rogers, E. M. (1962, 2003). Diffusion of Innovations (5th ed.). Free Press.
Saeed, K. A., & Bampton, R. (2013). The Impact of Information and Communication Technology on the Performance of Libyan Banks. Journal of WEI Business and Economics-December, 2, 21-26.
Salehi, M., & Alipour, H. (2014). Customer Satisfaction Measurement at Kerman Saderat Bank by Using of QFD Method to Improve Service Quality. Indian Journal of Fundamental and Applied Life Sciences, 5, 1664-1670.
Shahabi, V., & Razi, F. F. (2019). Modeling the Effect of Electronic Banking Expansion on Profitability Using Neural Networks and System Dynamics Approach. Qualitative Research in Financial Markets, 11, 197-210. https://doi.org/10.1108/QRFM-11-2018-0117
Shanmugam, K. R., & Nigam, R. (2020). Impact of Technology on the Financial Performance of Indian Commercial Banks: A Clustering Based Approach. Innovation and Development, 10, 433-449. https://doi.org/10.1080/2157930X.2019.1685792
Straub, E. T. (2009). Understanding Technology Adoption: Theory and Future Directions for Informal Learning. Review of Educational Research, 79, 625-649. https://doi.org/10.3102/0034654308325896
Suleymanov, Q., Farzaliyev, M., & Nagiyev, M. (2019). The Effects of Innovations on Bank Performance: The Case of Electronic Banking Services. Recent Trends in Science and Technology Management, No. 2, 20-29.
Summers, B. J. (2012). Payment Systems-Design, Governance and Oversight. Central Banking Publications.
Tasaki, T., & Yamakawa, H. (2011). An Estimation of the Effectiveness of Waste Prevention by Using Point-of-Sales (POS) Data—The Case of Refills for Shampoo and Hair Conditioner in Japan. Resources, Conservation and Recycling, 57, 61-66. https://doi.org/10.1016/j.resconrec.2011.09.019
Taylor, E. (2013). Staying Ahead of the Game. Mobile Technologies in Retail: A Review of Benefits and Risk (pp. 8-9). Efficient Consumer Response Australasia (ECRA) Loss Prevention Group.
Tran, M. H. (2021). Payment System and Bank Performance: Evidence from Vietnam. Journal of Contemporary Issues in Business and Government, 27, 91-94.
Tunay, K. B., Tunay, N., & Akhisar, I. (2015). Interaction between Internet Banking and Bank Performance: The Case of Europe. Procedia-Social and Behavioral Sciences, 195, 363-368. https://doi.org/10.1016/j.sbspro.2015.06.335
Valahzaghard, M., & Bilandi, E. (2014). The Impact of Electronic Banking on Profitability and Market Share: Evidence from Banking Industry. Management Science Letters, 4, 2531-2536. https://doi.org/10.5267/j.msl.2014.11.003
Vekya, J. M. (2017). Impact of Electronic Banking on the Profitability of Commercial Banks in Kenya. Journal of Technology and Systems, 1, 18-39.
Vijayalakshmi, B., & Jayalakshmi, M. (2019). A Study on Digital Transactions Impact on Financial Performance of Banking Sector with Reference to SBI and ICICI. Journal of Internet Banking and Commerce, 24, 1-13.
Vikram, S. K., & Gayathri, G. (2018). Impact of Information Technology on the Profitability of Banks in India. International Journal of Pure and Applied Mathematics, 118, 225-232.
WBG (World Bank Group) (2018). Payments System Worldwide: A Snap Short, Summary Outcomes of Fourth Global Payment Systems Survey. World Bank Group.
Yao, M., Di, H., Zheng, X., & Xu, X. (2018). Impact of Payment Technology Innovations on the Traditional Financial Industry: A Focus on China. Technological Forecasting and Social Change, 135, 199-207. https://doi.org/10.1016/j.techfore.2017.12.023
Yusuf, A. I., Oke, O. B., & Ezike, J. E. (2019). E-Payment Technology Channels and Performance of Deposit Money Banks: Evidence from Nigeria. International Journal of Intelligent Technologies & Applied Statistics, 12, 219-220.
Zu, J., Gu, Y., Li, K., & Bonsu, O. A. M. (2019). Impacts of Financial Innovations on Financial Performance Evidence of Electronic Banking in Africa. Methodology, 3, 56-60.