Effect of Digital Payment Channels on the Profitability of Nigerian Financial Institutions: A Panel Data Approach
Authors: Edogbo, D. A., Udefi, G. N., Okonkwo, Bonaventure S., Nkwo, F. N.
Journal: International Journal of Financial Economics and Accounting (IJFEA), ISSN 3023-3615
Citation: IJFEA 5(4): 1-15, 2025-12-20.
DOI: 10.70878/ijfea.2025.dd0eebd1
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Type: Original Research
Abstract
This study examines the effect of digital payment channels on the profitability of Nigerian financial institutions using a panel dataset covering the period 2014–2024. Profitability was proxied by Return on Assets (ROA), while digital payment channels were measured through transaction values from Point of Sale (POS), mobile banking, internet banking, Automated Teller Machine (ATM), and USSD platforms. An ex-post facto research design was employed, and panel data from 5 financial institutions which include Zenith Bank Plc, Fidelity Bank Plc, Sterling Bank Plc, Wema Bank Plc and United Bank for Africa Plc were analyzed using panel least squares regression. The empirical results reveal that mobile banking (β = 0.000113, p 0.05) also show a positive, though statistically insignificant, effect. In contrast, USSD transactions (β = -0.000105, p 0.05) and ATM transactions (β = -1.01E-05, p > 0.05) display negative and statistically insignificant effects on profitability. The overall model demonstrates strong explanatory power, with an R² of 0.9732 and a highly significant F-statistic (355.60; p
Keywords
Digital Payment Channels, Profitability, Nigerian Financial Institutions, Panel Regression
Full Text
This study examines the effect of digital payment channels on the profitability of Nigerian financial institutions using a panel dataset covering the period 2014–2024. Profitability was proxied by Return on Assets (ROA), while digital payment channels were measured through transaction values from Point of Sale (POS), mobile banking, internet banking, Automated Teller Machine (ATM), and USSD platforms. An ex-post facto research design was employed, and panel data from 5 financial institutions which include Zenith Bank Plc, Fidelity Bank Plc, Sterling Bank Plc, Wema Bank Plc and United Bank for Africa Plc were analyzed using panel least squares regression. The empirical results reveal that mobile banking (β = 0.000113, p 0.05) also show a positive, though statistically insignificant, effect. In contrast, USSD transactions (β = -0.000105, p 0.05) and ATM transactions (β = -1.01E-05, p > 0.05) display negative and statistically insignificant effects on profitability. The overall model demonstrates strong explanatory power, with an R² of 0.9732 and a highly significant F-statistic (355.60; p