Electronic Payment Systems and Performance of the Nigerian Banking Industry

Abstract

This study examined the effect of electronic payment systems on the performance of the Nigerian banking industry. The electronic payment systems considered were automated teller machine, point of sale, mobile payment technology and internet or web assisted payment medium on the bank performance indicator of return on assets. The study used quarterly frequency data from 2010Q1 to 2019Q4 and the static and dynamic models was estimated using the autoregressive distributed lag (ARDL) method. Stability of the series was tested using the augmented Dickey-Fuller and the bound test method was employed in testing for cointegrating relationship among the interest variables. From the bounds test, the study discovered common trend movement among the variables of interest. The long run result indicated that the usage of mobile phone technology and point-of-sale increase bank performance, but only insignificant. In addition, increased use of automated teller machine and web payment medium insignificantly cause decline in performance of banks in Nigeria. These results indicated that the performance of Nigerian banking industry is unaffected by the use of electronic payment systems. Following these results, it was recommended that banks invest in improving the speed, carrying capacity and accuracy of the payment systems