Electronic Payment System and Financial Deepening in Nigeria, 2009-2017

Abstract

This study sought to evaluate the impact of the electronic payment system on financial deepening indicators in Nigeria with particular focus on the popular Automated Teller Machine (ATM). The study adopted the ex-post factor research design and the granger causality tests, correlation analyses combined with other preliminary tests were used. Quarterly time series data for a 6-year-period 2009-2017, collected from the central bank of Nigeria statistical bulletins were used. Ratios of Broad money supply to Gross Domestic Product (M2GDP) and ratio of credit to the private sector to gross domestic product (CPSGDP) were used as the dependent variable and proxies for financial deepening, while the independent variables included volume of automated teller machine transactions, web payment, mobile payment and point of sales respectively. The research findings there exists a bi-directional relationship between automated teller machine transaction (LATM) and private sector credit (LCPSGDP) in Nigeria. Also, a unidirectional relationship between automated teller machine transaction (LATM) and broad money supply (LM2GDP) in Nigeria. The results recorded from the study agree with existing findings and theories and they all agree that there is a relationship between financial deepening and electronic payment channels in the Nigeria. It is therefore recommended that the government should make policies that will improve the use of diverse electronic channels with the aim of strengthening their impact on the degree of financial depth in Nigeria. Additionally, Adequate regulatory architecture should be put in place to ensure that the negative fallouts of the use of electronic payment channels are minimized. This is with the view to making them more acceptable to the people.