Cashless Policy And Commercial Banks’ Profitabilty In Nigeria

Akara, Chisom Kenneth; Asekome, Mike Ozemhoka

doi:10.14738/assrj.53.4262

Cited by 10 publications

(14 citation statements)

References 1 publication

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“…ATMs, internet banking, credit and debit cards, and other forms of digital banking reduce banks' expenses and increase their income, which has greatly increased their profitability (Akara, 2018;Gündoğdu & Taşkin, 2017).…”

Section: Literature Review and Theoretical Backgroundmentioning

confidence: 99%

The impact of digitalization on the banking sector: Evidence from fintech countries

Bousrih

2023

5002

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Banking services are now branded and are provided in distinct ways. It has been proven that the development of new financial services and products substantially impacts bank performance. This paper investigates the effect of e-banking services on the performance of banks before the pandemic. The study looks at a sample of 24 nations, including leading fintech nations. Data from 2012 to 2019 was gathered from the World Development Indicators and the Bank for International Settlements (BIS) databases. The findings show a significant positive correlation between cashless payments and banks' ROA. The performance of a bank is significantly impacted by mobile subscribers. In fact, customers are willing to use mobile transactions in place of traditional bank accounts. Banks' ability to generate revenue from assets (in the form of credits) is consequently restricted, which has an impact on their ability to earn a profit. The research suggests a range of policy implications and policy interconnections between digital financial services, banking stability, and efficiency. The banking sector has become more digitalized after the recent pandemic. To date, there is very little literature that has focused on the effect of digitalization on the banking sector before the Covid-19 crisis. The current study contributes to the literature by providing an overview of the relationship between the banking industry and digitalization before the latest pandemic for some leading fintech countries. This research will contribute to later comparisons between the different situations of the banking sector pre- and post-pandemic.

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Section: Literature Review and Theoretical Backgroundmentioning

confidence: 99%

The impact of digitalization on the banking sector: Evidence from fintech countries

Bousrih

2023

5002

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“…The return on asset (ROA) and return on equity (ROE) of banks would improve in the long run with the implementation of electronic banking (Yang et al, 2018). Electronic banking, such as ATMs, internet banking, credit and debit cards, lowers banks' expenditure and generates higher revenue, which has significantly improved banks' profitability (Aduda & Kingoo, 2012;Akara & Asekome, 2018;Gündoğdu & Taşkın, 2017;Itah & Emmanuel, 2014). However, Simpson (2002) demonstrates that electronic banking generated higher revenue for banks in the USA than in emerging markets, due to a strong information technology framework in the USA compared to developing countries.…”

Section: Empirical Reviewmentioning

confidence: 99%

Cashless Payments and Banking Performances: A Study of Local Commercial Banks in Malaysia

2022

IJBS

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The banking industry plays a facilitatory role in moving toward a cashless society. This study investigates the impacts of cashless payments (ATM, internet banking, mobile banking, credit card, debit card, charge card and e-money) on banking performance for eight local commercial banks in Malaysia over the period of 2005 to 2018. The findings show that cashless payments are positively related to the return on assets (ROA) and return on equity (ROE) of banks, except e-money. Furthermore, the study demonstrates cashless payments have improved the cost-to-income ratio of banks, except ATMs. Meanwhile, this study disaggregates the sample into subperiod analysis to further examine the transition effect of cashless payments on banks’ performance. The results show that banks’ profitability performance is mainly driven by the usage of cashless payments in the first wave of progressive development, while cashless payments do not show progressive impact on banks’ efficiency performance. This suggests that cashless payments do not add value to banks’ performances in the long run.

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“…On the other hand, the consistent results can be found in studies in some developing countries. Itah and Emmanuel (2014) and Akara and Asekome (2018) examined the impact of electronic banking in Nigeria. They found that electronic banking improved ROA and ROE of commercial bank in long run after the system of electronic banking is well-developed with the improvement of service delivery (Adewoye, 2013), cost effectiveness and wider coverage of electronic payment channels (Mustapha, 2018).…”

Section: Empirical Review On Electronic Payment and Bank Performancementioning

confidence: 99%

“…Although studies such as De Young et al ( 2007), Hernando and Nieto (2007), Onay and Ozsoz (2013) and Gündoğdu and Taşkın (2017) showed evidence that electronic banking services improved the performance of banks in developed countries, some studies (Khrawish & Al-Sa'di, 2011;Hosein, 2013;Gutu, 2014;Chen et al, 2019) showed contradictory findings in developing countries. But, Itah and Emmanuel (2014) and Akara and Asekome (2018) argue that the improvement of ROE can realised after the systems are well-developed in developing countries. Based on the research gap, we expect that electronic payments could enhance a bank's ROE.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

Does Electronic Payment Services Create Value to Bank Performance? Evidence from Southeast Asia

Ooi

Lee

et al. 2022

aamjaf

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This study examines the nexus between four electronic payment channels’ transaction values and bank performance of Malaysia, Singapore and Thailand for 2010–2020. We find that, the impact of credit and charge card’s transaction value on banks’ return on equity (ROE) is significantly positive across various econometric specifications, including firm fixed effect panel regression, two-way clustering method and generalised method of moment. Instead, the impacts of the other three payment channels (e-money, debit card and internet and mobile banking) are negative but not significance across all econometric specification. These suggest that only the credit and charge card is economically relevant to the banks’ shareholders. We further add that only credit and charge card significantly improves banks’ operating income, while all four payment channels are not significantly related to revenue growth of the banks. In the additional analysis, we find that e-money, debit card, internet and mobile banking are negatively influencing the relationship between banks’ operating income and ROE. In summary, our study implies that majority of the electronic payment services offered by banks are not economically sustainable in the long run.

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Cashless Policy And Commercial Banks’ Profitabilty In Nigeria

Cited by 10 publications

References 1 publication

The impact of digitalization on the banking sector: Evidence from fintech countries

The impact of digitalization on the banking sector: Evidence from fintech countries

Cashless Payments and Banking Performances: A Study of Local Commercial Banks in Malaysia

Does Electronic Payment Services Create Value to Bank Performance? Evidence from Southeast Asia

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