Electronic Banking Channels and Financial Performance in the Nigerian Banking Industry
DOI:
https://doi.org/10.61143/umyu-jafr.8(1)2025.013Keywords:
Electronic Banking, Financial Performance, TAMAbstract
This study investigates the impact of electronic banking channels on the financial performance of the Nigerian banking industry over the period 2000 to 2023. Utilizing Autoregressive Distributed Lag model, the research captures both short-run and long-run dynamics between Automated Teller Machines, Internet Banking, Mobile Banking, Point-of-Sale and financial performance indicators on Return on Assets and Financial Deepening Ratio. The results reveal a mixed pattern of findings: internet and mobile banking demonstrate statistically significant positive impact on profitability while Automated Teller Machines and Point-of-Sale channels exhibit inverse impacts, mainly due to high operational and infrastructural costs. Conversely, the influence of all four channels on financial deepening ratio is statistically insignificant, suggesting that the current deployment of electronic banking technologies does not substantially enhance long-term financial inclusion. These findings underscore the dual nature of electronic banking, profitable when efficiently scaled, but insufficient in driving inclusive finance without complementary structural and policy reforms. The study concludes with targeted policy recommendations, such as a dual-target strategy aligning profitability with inclusion goals; improved cost-sharing and rural deployment of Automated Teller Machines and Point-of-Sale infrastructure; regulatory reforms on transaction fee structures; product innovation in mobile and internet banking platforms; and the establishment of a national framework for tracking digital inclusion outcomes. These measures are essential for optimizing the economic benefits of electronic banking while promoting inclusive and sustainable financial sector growth in Nigeria.
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