Effects of e-transactions on the profitability of commercial banks in Nigeria

Abstract

This study examined the Effects of e-Transactions on the Profitability of Commercial Banks in Nigeria. E-cheque, ATM, POS, Mobile Money Transfer (MMT)  and Online Money Payment (WEB) are proxies for E-banking payments while Return on Equity (RoE) is used as proxy for commercial banks profitability.  Ex-post-Facto research design is adopted, covering the period 2010-2020. Diagnostic tests are conducted, and analysis of an Auto Regressive Distributed  Lag (ARDL) estimated, using Error Correction Model (ECM) approach. The result of analysis indicates that current values of E-CHEQUE, ATM, MMT, POS  and WEB are statistically significant at less than 0.05. While E-cheque is insignificant to the profitability of banks in Nigeria. This study thus, rejects the null  hypotheses and concludes that with the coefficient of determination (R² ) and adjusted R-Square of the model, about 83% influence on bank  profitability in Nigeria can be influenced by these variables of study. It is also meaning that the combined effect of the e-banking proxies in this study is  statistically significant in explaining the profitability of banks in Nigeria. The recommendations are that Banks should invest in all the channels of  electronic payment to ensure that the economy, just like a developed economy fully and seamlessly operates a cashless economy. It is obvious that the  fundamental of every developing economy is to make the banking sector stable and sustainable enough to drive its economy.