E-Payment Technology Effect on Bank Performance in Emerging Economies–Evidence from Nigeria

Saidi Atanda Mustapha

doi:10.3390/joitmc4040043

Abstract

The development of the financial sector has been a major growth driver in all economies, especially in emerging economies. Part of the financial innovations in the sector in recent times is the electronic payment system. Several studies in developed countries have substantiated the positive transformation of this financial innovation. This paper therefore contributes to this debate with three research innovations: first, it adopts a new measure of bank performance—the sortino index; second, it relates market risk exposure of banks to electronic payment technologies; and third, it controls for “without effects” of these innovations on bank performance using interacting dummies. Based on the time dimensional and panel least square models, it finds that bank performance increased after the adoption of electronic payment technologies. Finally, its findings show that bank performance contradicts autoregressive and random walk processes and thus implies that investors should not be disturbed about previous bank performances but concerned about current bank resources.

Highlights

Contributions of the financial sector to growth of an economy in undeveloped, developing, emerging and developed markets have been given astounding remarks in the literature. [1,2,3,4,5,6]
The study period is justifiable on two grounds: on the one hand, the cashless policy that heralded the beginning of the development of payment technology in Nigeria was brought to bear in 2012
The risk associated to the electronic payment system is much more prevalent compared to the previous cashless system, the relative impact of time is much higher in the profit measure than other performance

Summary

Introduction

Contributions of the financial sector to growth of an economy in undeveloped, developing, emerging and developed markets have been given astounding remarks in the literature. [1,2,3,4,5,6]. Contributions of the financial sector to growth of an economy in undeveloped, developing, emerging and developed markets have been given astounding remarks in the literature. In Nigeria, the general consensus of studies is that the financial sector propelled economic growth through various channels [5,7]. Activities of the Nigerian financial sector depends largely on deposit money banks. Bank performance is crucial to financial sector development. The evolution of electronic banking platforms/technologies came to existence in 2012, following the directives of the Central Bank of Nigeria to promote cashless systems. Most banks commenced the implementation of the instruction almost immediately with the pilot study held in Lagos State, Nigeria. Before the end of the year, the thirty-five States of the Federation and the Federal Capital Territory had adjusted to the cashless policy

Methods

Results

Conclusion