Electronic Banking and Economic Growth in Nigeria: An Autoregressive Distributed Lag (ARDL) Time-Series Analysis

Abstract

This study assessed the effect of electronic banking on economic growth in Nigeria using an Autoregressive Distributed Lag (ARDL) time-series framework. Specifically, it examined how transactions through automated teller machines (ATMs), mobile banking, internet banking and point-of-sale (POS) terminals relate to real gross domestic product (RGDP). The study adopted an ex-post facto research design and used annual secondary data for 2006-2023, obtained from the Central Bank of Nigeria Statistical Bulletin. The ARDL bounds test indicated no long-run relationship between electronic banking channels and economic growth, as the F-statistic of 2.144076 was below both the lower and upper critical bounds at the 5% level. The short-run estimates showed that ATM and mobile banking transactions had negative but statistically insignificant relationships with RGDP, while internet banking and POS terminal transactions had positive but statistically insignificant relationships. The Granger causality results further showed no unidirectional or bidirectional causality between each electronic banking channel and RGDP over the study period. These findings suggest that, within the period examined, the expansion of electronic banking transactions did not translate into a statistically significant contribution to Nigeria's economic growth. The study therefore concludes that electronic banking, although useful for transaction convenience and service delivery, has not yet provided a measurable macroeconomic growth effect in the Nigerian context examined. It recommends improved public awareness of ATM use, fuller deployment of cashless instruments by deposit money banks, stronger monitoring of web and mobile payment channels by the Central Bank of Nigeria and commercial banks, and wider promotion of POS payment systems to support safer and more efficient transactions.