international journal of interdisciplinary business

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Effect of Cashless Banking on Economic Growth in Nigeria.

Dr. Mrs. Ozoji Amara Priscilia

Department of Accountancy, University of Nigeria, Enugu Campus, Enugu.

E-mail: [email protected] Phone number: 08063018677

Dr. Mrs. Ezechukwu Beatrice O.

Department of Accountancy, Federal Polytechnic, Oko

E-mail: [email protected]

ABSTRACT

This study empirically examined the effect of

cashless banking on economic growth in

Nigeria, with a focus on the aggregate data

of all the banks operating in the country as at

2012-2018, as documented in the CBN

annual report. The study adopted an ex-post

facto research design, thus secondary source

of data collection was employed. Cashless

banking system as the independent variable

of this study was measured with total annual

value of automated teller machines, Point of

sale, internet banking and mobile – phone

banking transactions(TATM, TPOS, TMPS

and TIB) during the period of cashless

banking (2012-2018) in Nigeria; whereas the

dependent variable, economic growth was

measured with bank’s contribution to

Nigeria’s real gross domestic products

(BGDP) from 2012-2018. Data gathered

were presented in tables and analyzed using

multiple regression techniques (ordinary

least squares) of model estimation with the

aid of E-Views 10.0 econometric software.

Results show that all the explanatory

variables (TATM, TPOS, TMPS and TIB)

have positive and significant effect on BGDP

in Nigeria (B1 (X1), B2 (X2), B3 (X3), B4

(X4) = 0.223749 (0.0214), 0.153603(0.0148),

0.212357(0.0041) and 0.119908(0.0395)

respectively). Considering the independent

variables as a group, the study revealed that

cashless banking system has a significant

positive effect on BGDP in Nigeria (R2=

91.4%, F- Stat.= 84.37156 and Prob(F-

statistics) = 0.000000<0.05). Though the

result showed that cashless banking in

Nigeria has significantly increased Nigeria’s

economic growth, the coefficient values of the

explanatory variables are quite low, showing

that more growth could still be achieved with

further improvement in the practice of

cashless banking in Nigeria especially now

that the world grapples with Covid-19

pandemic and its economic meltdown. Based

on the findings, a collaboration and

cooperation of various stakeholders like the

government, CBN and Bank’s customers

were recommended to strengthen the

Nigeria’s cashless banking system for long-

term sustainability. The government should

ensure the provision of uninterrupted power

supply which would aid smooth operations of

digital financial activities. The CBN should

intensify its enlightenment campaign to

sensitize the public on the need to use

cashless banking instruments. Bank’s

customers have greater role in accepting and

using the cashless banking instruments.

Keywords: Cashless banking, Cashless

policy, Economic growth, COVID-19.

1. INTRODUCTION

Banking system in Nigeria has passed the era

at which banking business required only the

physical presence of the customers or their

agents in the bank premises to the era where

banking activities can also be carried out

from home, business premises or even on the

road with the aid of digital devices. This is as

International Journal of Interdisciplinary Business Strategy (IJIBS) Vol. 1 No. 1, Feb. 2021

mailto:[email protected]

26

a result of technology advancement

witnessed in the 21st century, which has

transformed the landscape of businesses

including the banking sector. Sanusi (2002)

as cited by Dogarawa (2005) states that the

introduction of electronic banking (e-

payment) products in Nigeria commenced in

1996 when the Central Bank of Nigeria

(CBN) granted all states trust bank approval

to introduce a closed system electronic purse

called electronic system cards (ESCA). Other

forms of electronic cards like pay card, value

card and smart pay were further introduced

by Diamond bank in February 1997,

Smartcard Nigeria plc (a company floated by

a consortium of 9 banks) in 1998 and

Gemcard Nigeria limited (another consortium

of more than 20 banks) in 1999 respectively

with CBN approval (Ekwueme, Egbunike

and Okoye, 2012). In other to facilitate the

electronic cards usage and further enhance

their service delivery, the automated teller

machine (ATM), Point of sale (POS)

terminals, and other card used electronic

devices were deployed by some banks.

In the bid to reduce (not eliminate) the

amount of physical cash circulating in the

economy and encourage more electronic-

based transactions, the CBN recently in 2012

introduced/Implemented cashless policy in

Nigeria. The CBN cashless policy effective

from June 1, 2012 stipulates a daily

cumulative limit of ₦500,000 and

₦3,000,000 on cash withdrawals and

lodgments by individual and cooperate

bodies respectively free of processing fees.

The processing fee of 3% and 5% (currently

reviewed in February, 2017 as follows: above

₦500,000 - ₦1,000,000: 2%, above

₦1,000,000 - ₦5,000,000: 3%, above

₦5,000,000: 7.5% and above ₦3,000,000 -

₦10,000,000: 5%, above ₦10,000,000 -

₦40,000,000 :7.5%, above ₦40,0000,0000:

10% - Fatokun, 2017) will be charged to

individuals and corporate organizations

respectively that make withdrawals above the

daily limits for amounts above the

cumulative limit. Lodgments above the limit

attracts 2% and 3% (reviewed in February,

2017 as follows: above ₦500,000 -

₦1,000,000: 1.5%, above ₦1,000,000 -

₦5,000,000: 2%, above ₦5,000,000 :3%, and

above ₦3,000,000 - ₦10,000,000: 2%, above

₦10,000,000 - ₦40,000,000: 3%, above

₦40,000000: 5% - Fatokun, 2017)

processing fees for individuals and corporate

bodies respectively (CBN, 2012).

Furthermore, 3rd party cheques above

#150,000 shall not be eligible for encashment

over the counter from 2012. Value for such

cheques shall be reviewed through the

clearing house.

Consequently, Nigerian banks now transited

from cash-based banking system to cashless

banking system. The implication is not an

outright absence of cash transactions in

banking sector but one in which the amount

of cash-based transactions are kept to the

barest minimum while encouraging more

electronic based banking transactions. Hence,

cashless banking in Nigeria could better be

called cash-light banking system (Okoye,

2018).

The CBN (2012), when stating the key

reasons for the introduction of cashless

policy pointed out that cashless banking

system (efficient and modern payment

system) is a key enabler for economic

growth. In line with the CBN (2012) view

above, Omotunde, Sunday and John-Dewole

(2013) in their study on the impact of

cashless economy in Nigeria, stated that the

impact of cashless economy in Nigeria is

expected to be felt in modernization of

Nigerian payment system, reduction in the

cost of banking services as well as reduction

in high security and safety risks, including its

stability in curbing banking related

corruptions and fostering transparency.


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Additionally, Aiyedogbon, Obumneke and

Gugong (2013) in their research on the

effectiveness of cashless banking on

economic growth in Nigeria, disclosed that

ATM and POS have significant impact on

Nigerian economic growth (1% change ATM

and POS results to 0.46% and 1.60% increase

in Nigerians GDP). whereas mobile money

has not contributed immensely to Nigerian

economic growth (1% in mobile money

reduces the GDP by 0.19%). The views

above are contrary to the persistent public

outcry in recent time in Nigeria as regards the

ever increasing challenges which the practice

of cashless banking since its inception has

posed to the banks and growth of the

economy. For instance, Ezeudu and

Anyanwu (2014) disclosed that the

introduction of cashless banking policy

would automatically reduce the number of

personnel needed to carryout different

financial transactions in the banks. This

implies that the rate of unemployment in the

country would be increased and this affects

the country’s GDP (economic growth) since

the private consumption of the unemployed

labour force would be negatively affected.

Additionally, Kutznet, 1973 (as cited in

Agbadudu and Obayagbona, 2013) stated that

every modern economic growth must possess

six identified characteristics and one of them

is high rate of increase in total factor

productivity especially labour (increase in

employment rate). Furthermore, the current

economic situation in Nigeria where job

losses, may drive more people into fraudulent

acts, as disgruntled and ex-staff may serve as

resource for committing fraudulent activities

(Nigeria Electronic Fraud Forum Annual

Report, 2016); thus the insecurity in the

country is been increased and this affects the

total investment (GDP in extension) in the

nation. In support of this view, UNCTAD,

2013 (as cited in Agbadudu and Obayagbona,

2013) stated that Foreign direct investment

inflows to Nigeria fells from $8.9 billion

(#1.424 trillion) in 2011 to $7 billion (#1.120

trillion) in 2012 due to political insecurity

and a weak global economy.

Now, in view of wide range of conflicting

empirical studies on how cashless banking

affects the economic growth in Nigeria,

coupled with the fact that most of these

studies used total GDP as the measure for

economic growth, ignoring that total GDP of

every country (whether real or nominal)

composed of different sector’s contributions

to GDP and a result of a study that shows an

increase in GDP may be as a result of the

positive contributions of other sectors of the

economy (other than the banks) to GDP; this

study specifically aimed at empirically

determining the effect of cashless banking on

banks contribution to Nigeria’s GDP.

In other to achieve this objective, a

hypothesis stating that cashless banking in

Nigeria has no significant effect on banks

contribution to Nigeria’s real gross domestic

product (BGDP) was formulated and tested.

The remaining part of the paper is organized

in the order of review of the literature under

investigation which was presented in section

two, the methodology presented in section

three, results of empirical findings presented

in section four, and finally, conclusion and

recommendations presented in section 5.

2. REVIEW OF RELATED

LITERATURE

In this section, different literatures as related

to the study were reviewed in the order of

conceptual review, theoretical framework and

empirical review.

2.1 Conceptual Review

2.1.1 Electronic banking

Banking has come a long way from the time

of ledger cards and other manual filling

system to the computer age. From the

traditional view point, banking business


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means the business of receiving deposits on

current accounts, savings account and other

similar accounts and the payments and

collections of cheques drawn or paid in by

customers through the physical presence of

the customer or his agent, client or creditor in

the bank premises. Digitization later re-

sharpen this initial arrangement to the idea

that individuals and companies can have

access to payments, savings and credit

products with the aid of electronic devices,

without ever stepping into a bank. This

placed electronic as prefix to banking (e-

banking). James and Rodger (2016) have it

that digital finance can essentially turn a

smart phone into a wallet, a cheque book, a

bank branch and an accounting ledger, all in

one.

Electronic banking simply means carrying

out banking business electronically. Shehu,

Aliyu, and Musa (2013) posited that e-

banking involves providing retail or small

value products and also large or wholesale

banking products electronically. Gordon

(2000) as cited by Okoye (2018) defined

electronic banking as part of the growing

field of electronic commerce. Whereas

electronic commerce is the mechanism of

transactions via electronic means usually the

internet and other methods as well.

According to Adewolo (2015), E-Banking

involves creating opportunities through the

infrastructure in the digital age. Odigiyan

(2005) as cited by Anyaoha (2000) holds the

view that e-banking emphasizes the

following perspectives: from the

communication perspectives, it is the

delivery of banking information, products

and services or payment through telephone

lines, computer networks or another means.

From the business perspective, it is the

application of technology towards the

automation of banking transactions and

workflow. Services perspective sees it as a

tool that addresses the desire of companies,

customers and management to cut services

costs while improving the quality of product

and increasing the speed of services delivery.

In Nigeria, electronic banking system did not

mean the execution of banking transactions

through electronic means only, but include

cash –based banking transactions also. Many

Nigerians still make cash withdrawals over

the counter in addition to electronic – based

banking transactions in the electronic

banking era. In support of this view,

Ekwueme et al (2012) stated that e- banking

in Nigeria can be said to be an ‘add’ process

and not an ‘or’ process. Therefore, e- banking

system in Nigeria involves both cash – based

banking transactions and electronic based

banking transactions but predominated by

cash-based banking transactions.

2.1.2 Cashless policy cum cashless banking

in Nigeria

In order to encourage more electronic means

of transaction and reduce the high cost of

cash in Nigerian financial system, the CBN

recently, in 2012 came out with a policy

called cashless policy. The CBN cashless

policy effective from June 1, 2012 stipulates

a daily cumulative limit of ₦500,000 (at the

conception of the policy in 2011, these were

pegged at N150,000) and ₦3 million

(previously pegged at N1 million at the

conception of the policy in 2011) on cash

withdrawals and lodgments by individual and

corporate bodies respectively free of

processing fees (or cash handling charge or

service charge). Individuals and corporate

organization that make withdrawals above

the daily limits will be charged the

processing fee of 3% and 5% (currently

reviewed in February, 2017 as follows: above

N500,000 - N1m: 2%, above N1m – N5 m:

3%, above N5 m: 7.5% and above N3m -

N10 m: 5%, above N10 m – N40m: 7.5%,

above N40 m: 10% -Fatokun, 2017)

respectively for amount above the cumulative


29

limits. Lodgment above the limit attracts 2%

and 3% (reviewed in February, 2017 as

follows: above N500,000 - N1 m: 1.5%,

above N1m – N5 m: 2%, above N5m: 3%

and above N3m - N10 m: 2%, above N10m –

N40 m: 3%, above N40 m: 5% -Fatokun,

2017), processing fee for individuals and

corporate bodies respectively. This limit

applies to all accounts so far as it involves

cash, irrespective of the channel used,

(example, over the counter, ATM, 3rd party

cheques, enchased over the counter etc) in

which cash is withdrawn, with exception of

accounts operated by Ministries, Departments

and Agencies of the Federal and State and

local governments, solely meant for the

purpose of revenue collections (Fatokun,

2017 added lodgment only). Exemptions are

also extended to Embassies, Diplomatic

Missions and Multi- lateral and Aid-donor

Agencies as well as Micro Finance Banks

and Primary Mortgage Institutions (CBN,

2012). It was also stated that the limit also

applies to cash brought through cash- In-

Transit (CIT) companies, as they are licensed

to provide cash-pick up services. Any bank

that continues to offer cash in transit

lodgment services to Merchants shall be

sanctioned. Furthermore, 3rd party cheques

above ₦150,000 shall not be eligible for

encashment over the counter. Value for such

cheques shall be received through the

clearing house.

The cashless policy gave rise to cashless

banking in Nigeria. According to Akhalumeh

and Ohiokha (2012), cashless banking system

is a system in which transactions are not done

predominantly in exchange for actual cash.

Odior and Banuso (2012) added that cashless

banking is that banking system aimed at

reducing, but not eliminating, the volume of

physical cash circulating in the economy

whilst encouraging more electronic based

transaction. Obinna as cited in Osazebaru,

Sakpaide and Ibubune (2014) opined that this

system increases convenience, create more

service options, reduce cost of cash related

crimes and provide cheaper access to credit.

Ovia as cited in Ezuwore-Obodoekwe, Eyisi,

Emengini and Chukwubuzo (2014) posits

that currency and notes are converted into

data which are transmitted through telephone

lines and satellites transporters in a cashless

banking system. In view of this, Ejiofor and

Rosak (2012) posit cashless system as one

with the ability to store money in an

electronic purse on a card which is then used

to purchase product at vending machine or at

any point of sales terminal located within the

business premises.

Cashless banking system in Nigeria can

therefore be seen as a system of banking that

involves both cash- based banking

transactions and electronic based banking

transactions but predominated with electronic

based banking transactions. However,

cashless banking in Nigeria could better be

referred to as cash light banking system.

2.1.3 Major instruments of cashless

banking in Nigeria

In addition to human teller, automated teller

machine (ATM), Smart card or electronic

pulse (use of point of sale terminal), internet

banking and mobile phone banking are the

major instruments of cashless banking in

Nigeria.

• Automated Teller Machine: This is an

electronic device which allows banks

customers to make cash withdrawals,

deposits, transfer funds between

accounts and check their account

balances at any time without the need

for a human teller but through an

insert of ATM card and entering of

the customer’s personal identification

number (PIN) which gives access to

the account of the owner of the card.

Some ATMs impose a surcharge, or


30

usage fee, on consumer who are not

member of their institution or on

transactions at remote locations.

ATMs must disclose the existence of

a surcharge on the terminal screen or

on a sign next to the screen.

Customers should check the rules of

their institutions to find out when or

whether a surcharge is imposed.

When an ATM card is lost by a customer, the

issuer should be notified by a certified letter

from the customer, return receipt requested,

so that the customer can prove that the

institution received his/her letter. A copy of

the letter sent by the customer is kept for

record purposes. Failure to notify the

institution of the error within 60 days, the

customer may have little recourse. Under

Federal Law, the institution has no obligation

to conduct an investigation if the customer

has missed the 60-days deadline. After

notification about an error in the customer’s

statement, the institution has 10 business

days to investigate. The financial institution

must tell you the results of its investigation

within three business days after completing it

and must correct the error within one

business day after determining that the error

had occurred. If the institution needs more

time, it may take up to 45 days to complete

the investigation but only if the money in

dispute is returned to the customer’s account,

he/she is notified promptly of the credit

(Okoye, 2018). If no error is found at the end

of the investigation, the money is taken back

by the institution with a written explanation

sent to the customer. The CBN recently in

Nigeria, issued a warning that banks will be

liable for ATM frauds committed with cards

issued without card owners requesting for it.

• Point of Sale Terminal (use of

smart card): This is an electronic

device mounted by a merchant for use

by the customer to make payment for

goods and services purchased, obtain

balance inquiry and electronic fund

transfer without the physical use of

cash. At POS terminals, a customer

slots in his/her card (smart card) into

the device to settle and store the

transaction, issue receipt and disclose

the balance on the card, his/her

account is debited at that point

resulting in a transfer of funds to the

merchant’s (service provider's)

account. The merchants are

designated centres where cardholders

can transact business using electronic

pulse or card. They include such

places as restaurants, hotels, airlines,

supermarkets and lately some

pharmaceuticals. As a matter of

policy, merchants normally targeted

for the scheme are outlets with a

business turnover of not less than one

million naira annually. Merchants,

unlike card holders, need not have an

account with the bank. But as a matter

of necessity, they are required to open

an account with the bank.

According to Ekwueme et al. (2012) as cited

in Okoye (2018), smart card is a card issued

to a customer (a person who has a current

account with the bank) by a member bank of

SMART CARD Nigeria Limited to aid them

in their transactions. Ideally, each card holder

(customer, to whom a card or electronic pulse

is issued) should be an existing customer

with a member bank of the consortium

responsible for such e-money product. The

card issued to the customer is usually PIN

protected (Personal Identification Number),

and each card holder has access/pass code or

password different from any other person's.


31

Such a pass code must be kept secret and

must be changed any time it becomes known

to someone else. The bank is exempted from

any form of liability whatsoever for

complying with any or all instrument(s)

given by means of the customer’s pass code

or access code if by any means any of such

code becomes known to a third party. At

intervals, the card should be taken to any

branch or designated branch as the case may

be to UPLOAD (similar to crediting the

account). When this is done, it reduces the

cash value of the current account with the

bank and increases the cash value of the card.

Uploading is done using the Bank Teller

Terminal (BTT).

Member banks of the consortium help to

reconcile the card balances with the current

account of the cardholder domiciled in the

bank. Banks normally charge interest for the

role though this varies from bank to bank.

Like merchants, the bank also has point of

sales terminal to satisfy customers who need

cash for other non-business related

transactions (Iyabi, 1997 as cited in Okoye,

2018).

• Mobile Phone: Mobile phones can

be used to effect payments and

deliver financial services in digital

finance (e- banking and cashless

banking system). Some of the

banking services which are provided

through mobile phone include

account balance inquiry, funds

transfer, payment of bills, short

message service (SMS) which notifies

the customer of any transaction on

his/her account. In the view of James

and Rodger (2016), dig ital finance

can essentially turn a smart phone

into a wallet, a checkbook, a bank

branch and an accounting ledger, all

in one.

Internet (WEB): internet is also used to

carry out banking transactions and also

disseminate information. The word “internet”

is the abbreviation for international network

for communication. It means a global

network of computers. It is a collection of

computers networks, computers and millions

of users, who share a compatible means for

interacting with one another to exchange

information (Awe, 1998 as cited in Okoye,

2018). Banks send letters / messages related

to their customer’s account (for example,

statement of account, debit or credit into

customer’s account etc), electronically to

their customers anywhere in the world via

electronic mail (E-mail) and e-mail to fax (a

supplementary service to the email services

designed to enable a subscriber send

messages to those who have no e-mail

facility but fax facilities). Also, banks

disseminate information or advertise their

services via their websites. Those in need for

such information will then use special

software called “browser” to link up with the

websites and read or download any

information they want.

• Human Teller: This involved the use

of human beings in the execution of

banking operations. The tellers accept

cash deposits, make cash payments

and also render other banking services

to the customers over the counter.

Even the use of electronic devices

discussed above cannot be possible

without human beings because

computers and other digital devices

are operated by human beings. Hence,

the cashless banking system in

Nigeria did not imply an outright

absence of human beings in carrying

out banking transactions but one that


32

encourage more electronic based

transactions.

2.1.4 The Operational Efficiency of

Cashless Banking in Nigeria

The operational efficiency of cashless

banking in Nigeria can be assessed by

critically evaluating the banking operations

before and after the introduction of cashless

banking in Nigeria

2.1.4.1 Pre- Cashless banking period in

Nigeria

This period is characterized by large

domination of cash-based and paper-based

banking transactions. In Nigeria, the era

commenced in the year 1892 with the

establishment of first bank (then African

Banking Corporation). Iganiga (1998) and

Osabuohien (2008) as cited in Ekwueme et al

(2013) maintained that there was no banking

legislation until 1952 when three foreign

banks (Bank of British West Africa, Barclays

Bank, and British and French Bank) and two

indigenous banks (National Bank of Nigeria

and African Continental Bank) were

established, with a total number of 40

branches. Ugwoke (2013) added that

Nigerian banking industry have witnessed a

lot of regulatory and institute advances since

1952. As at 1988, the Nigerian banking

system consisted of the CBN, 42 commercial

banks and 24 Merchant Banks (Iganiga 1998

and Adam, 2005 as cited by Osabuohien,

2008). Between the period 1892-1995,

banking transactions in Nigeria were mostly

paper-based transaction. This is the time of

ledger cards and other manual filling system.

Manual processing of documents was in use.

In the 1970s, computerization in the Nigerian

banking industry was introduced first by

Society General Bank (Nigeria) Limited.

Salawu and Salawu (2007) stated that few

banks that were computerized in the mid

1990 adopted the Local Area Network (LAN)

whereas the sophisticated ones among the

banks implemented the WAN by linking

branches within cities and one or two

implemented intercity connectivity using

leased lines. As a result of these, slow pace

of banking operations were experienced in

the Nigerian banks during this time (1892-

1995). Ovia (2005) have it that banks’

customers were inevitably made to spend

several hours in the congested banking halls

in carrying out their transactions. In support

of this view, Ekwueme et al (2013) posit that

pre-electronic banking periods were days

when banking halls are characterized by long

ques mainly as a result of delays in the

traditional banking operations thereby

leading to low operational efficiency in the

banking sector.

The need to innovate and modernize banking

operation to meet customer’s demand for

improved service delivery in the face of

advanced information and technology era

made the adoption of internet and other

electronic means of banking transactions

imperative. The Nigerian banks in 1996

witnessed the introduction of e-banking (e-

payment) products by the central bank of

Nigeria (Dogarawa, 2005 and Sanusi, 2002

as cited in Ekwueme et al, 2013). During this

period, banking operations were usually

performed through electronic means.

Irechukwu (2000) lists some banking services

that have been revolutionized through the use

of ICT as including account opening,

customer account mandate, and transaction

processing and recording. This phenomenon

has the capacity of bringing about speedy

operations and enhanced productivity in

banks (Osabuohien, 2008; Adeoti, 2005, and

Ovia, 2005 as cited in Ekwueme et al, 2013).

The fear being expressed is the bulk

withdrawals that were witnessed during the

e-banking period which usually attract high

cash related costs like cash in transit costs,

cash processing cost and vault management

cost. CBN (2012) stated that the total direct


33

cost of cash to financial system in Nigeria in

2009 amounted to #114.5b.

Conclusively, the era pre-cashless banking

system could be said to be the combination of

cash-based banking system and electronic

banking system, but dominated by cash-

based banking system. A cash-based

economy is one with large percentage of cash

residing outside the banking sector. It is

characterized by the psychology to physical

hold and touch cash. The statistical evidence

provided by CBN (2012) revealed that, cash

related transactions accounted for 99% of

customers’ activities in Nigerian banks as at

December, 2011.These heavily cash-based

transactions do not occur without heavily

cash related costs. Hence, there is the need

for a cashless banking system.

2.1.4.2 Post Cashless banking period in

Nigeria

Using electronic banking as a platform, the

CBN cashless policy was introduced in

Nigeria in the year 2012. The policy is geared

towards engendering an efficient payment

system anchored on electronic-based

transaction. According to Odior and Bunuso

(2012), cashless banking is that banking

system that is aimed at reducing, but not

eliminating, the volume of physical cash

circulating in the economy whilst

encouraging more electronic based

transaction. Post cashless banking period are

the periods in which the use of non-cash

payment methods (e.g electronic payment)

dominates the use of cash in payments. This

does not imply entire absence of cash-based

transactions but a system that kept the

cashless transactions to the barest minimal.

This has resulted to reduction in the risks

associated with the use of physical cash that

do rise from burglaries and thefts as well as

financial losses in fire outbreaks. Also, high

operational costs (costs emanates from cash

management and movement, currency sorting

and printing) incurred by banks and other

financial institutions had considerably

reduced by cashless banking system. In line

with the view stated above, Okoye and

Ezejiofor (2013) posit that cashless economy

policy will help to fight against

corruption/money laundry, reduced the risk

of carrying cash and also enhance the growth

of financial stability in the country. Tee and

Ong (2016) maintained that there is

significant effect of adopting cashless

payment on the economy of five EU

countries, namely Austria, Belgium, France,

Germany and Portugal. Martin, Nnamani,

Marire and Mgbodile (2014) viewed that

cashless banking in Nigeria will help in

modernization of Nigerian payment system,

reduction in cost of banking services as well

as reduction in high security and safety risks.

There is no doubt that the adoption of

cashless banking system has in Nigeria

enabled banks to achieve a higher level of

operational efficiency, provide cost effective

services and offer a wide spread flow of

information at no time and at a reasonable

cost but the major fear being expressed is its

effect on the economic growth in Nigeria.

2.1.5 Economic Growth

Economic growth is simply an increase in

aggregate productivity. It could be seen as

increase in the capacity of an economy to

produce goods and services, compared from

one period to another. The definition of

economic growth above presupposes that

GDP is the best measure of economic

growth. It can be measured in nominal or real

terms. The later of which is adjusted for

inflation while the former of which did not

involve adjustment for inflation. Economic

growth could be seen as the measure of the

rate of change that a nations’ gross domestic

product (GDP) goes through.


34

The two main factors affecting economic

growth are;

(a) Aggregate demand (AD) and

(b) Aggregate Supply (productive

capacity)

(a) Aggregate demand: in short term,

economic growth occurs when there is

an increase in aggregate demand (AD).

If there is spare capacity in the

economy, then an increase in AD will

cause a higher level of real GDP.

AD=C+I+G+X-M

Where C= consumer spending, I= investment

(gross fixed capital investment), G=

government spending, X= export, M=

imports.

AD could be increased when there is lower

interest rate (which reduces the cost of

borrowing and encourages spending and

investment), increased wages (which increase

disposable income and encourages consumer

spending), increased government spending

(G), fall in value of sterling which makes

exports (X), increased consumer confidence

(which encourages spending (C), lower

income tax (which increases disposable

income of consumers and increases consumer

spending (C).

(b)Aggregate Supply: An increase in long run

aggregate supply (productive capacity) as

well as AD brings about long term economic

growth. As could be increased when there is

increases capital e.g. investment in new

factories or investment in infrastructure such

as roads, increase in working population

(through immigration, higher birth rate etc),

increase in labour productivity (through

better education and training or improved

technology), discovering new raw materials

and technological improvement to improve

the productivity of capital and labour.

Other factors affecting economic growth are

inflationary rate (low inflation encourages

business investment while high inflation

increases volatility) and economic and

political stability (stability encourages firms

to invest in increasing capacity while rise in

uncertainty brings about fall in firm’s

confidence and thus can cause firms to delay

investment).

2.1.5. 1 GDP as the Measure of Economic

Growth

GDP is the broadest quantitative measure of a

nation’s total economic activity. It represents

the monetary value of all goods and services

produced within a nation’s geographic

boarders over a specified period of time. A

country’s GDP could be stated in real value

or nominal value. Real GDP is the value of

final goods and services produced in a given

year when valued at constant price. Nominal

GDP on the other hand is the value of the

final goods and services produced in a given

year valued at the price that prevailed in that

same year. For the purpose of this study,

Nigerian bank’s contribution to real GDP is

used. This is seen as the most suitable

measure of economic growth using GDP,

since it controls for inflation and more

accurately reflects actual economic growth.

Otherwise, a decline in the value of money

could raise GDP without any extra economic

production.

Below are the four components of GDP;

(a) Private consumption and expenditure

(C): This component measures the

money value of goods and services

which are purchased by households and

non-profit institutions for current use

during a period of account. These are

classified into consumer durables,

semi-durables, non-durables and

services.


35

(b) Investment expenditure (I): Investment

means additions to the physical stock of

capital during a period of time. Gross

private domestic investment shows the

aggregate value in this regard.

Investment includes building of

machinery, housing construction,

construction of factories and offices

and additions to a firm’s inventories of

goods. Investment is further classified

into 4 categories;

(i) Business fixed investment: Amount

which business units spend on purchase

of newly produced capital goods like

plant and equipment.

(ii) Inventory investment (or change in

stock). Net change in inventories

(stock) of final goods awaiting sale of

finished goods, semi-finished goods

and raw material. These are included

because they represent currently

produced goods which are not included

in the current sale of final output

(iii) Residential construction investment:

The amount spent on construction of

flats and residential houses.

(iv) Public Investment: Capital formation

by government in the form of building

of roads, bridges, canals, schools,

hospital etc.

(c) Government purchase of goods and

services: This summarises government

spending on goods and services. It

includes; (i) purchase of intermediate

goods and (ii) wages and salaries paid by

government. Transfer payment which are

made by government to households and

firms are not counted as part of GDP

thus since the consumption or investment

by recipients of the transfer payments is

counted in C and I

(d) Net exports (X-M): It shows the

difference between domestic spending

on foreign goods (imports) and foreign

spending on domestic goods (exports).

GDP is calculated with the formula:

GDP=C+I+G+(X-M). This can be

restated as:

GDP = Gross National Expenditure +

Trade balance

Where trade balance include

merchandise (export – imports of goods)

and services (export – imports of

services).

2.1.6 Differences Between Economic

Growth and Economic Development

In many literatures, economic growth and

economic development are often used

interchangeably. This is not right in the view

of many economists, accountants or finance

experts. Economic growth means different

thing entirely from economic development.

Economic growth occurs whenever there is a

quantitative increase in a country’s input and

output over a period of time (Agbadudu and

Obayagbona, 2013). A country’s economic

growth could be defined as a long term rise in

the capacity to supply increasingly diverse

economic goods to its population, this

growing capacity based on advancing

technology and institutional and ideological

adjustments that it demands (Kuznets 1973,

as cited in Agbadudu and Obayagbona,

2013). Therefore, economic growth simply

describes expansion in capital, in the

productive labour force, in output and

income.

On the other hand, economic development is

a multi-dimensional process involving

changes in structures, attitudes and

institutions as well as the acceleration of

economic growth, the reduction of inequality

and eradication of absolute poverty (Tadaro,


36

1977) as cited by Agbadudu and Obayagbona

(2013). From the point of view of Merier

(1964), as cited by Agbedudu and

Obayagbona (2013), economic development

is seen as the process whereby the real per

capita income of a country increases over a

long period of time subject to the stipulations

that the number below an absolute poverty

line does not increase, and that the

distribution of income does not become more

equal.

Hence, economic development is wider in

scope than economic growth, it encompasses

both economic growth and other indices like

changes in structures and attitudes,

eradication of absolute poverty etc.

Economic development also involves

sustaining growth in per capita income

whereas economic growth involves

sustaining growth in national income.

2.2 Theoretical Framework

The theoretical framework that guided this

study was based on two theoretical

conceptions which include the neo-classical

growth theory and Acceptance Technology

Model (TAM).

2.2.1 Neo-classical growth theory: The neo-

classical growth theory was developed in the

late 1950s and 1960s of the twentieth century

as a result of intensive research in the field of

growth economics. Robert Solow, an

American economist and J. E. Meade, a

British economist are the two prominent

contributors to the neo-classical theory of

growth.

This theory postulates that long run growth

can only happen from both the exogenous

labour force growth and technological

progress. In other words, Jhingan (2003)

posits that neo-classical growth theory

explains that output is a function of growth in

factor inputs, especially capital and labour

and exogenous technological progress. Any

change in this exogenous variable,

technology, will cause a shift in the

production function.

This theory has been criticized by some

scholar, among others is Nobel Laureate

Prof. Amartya Sen. He stressed that the neo-

classical growth theory of Solow is missing

knowledge or education as an important

factor contributing to economic growth. He

argued that increase in knowledge or

education increases the productivity of

workers by improving their productive skills

and abilities. Therefore, human capital as

knowledge or education was identified by

Nobel Laureate Prof. Amartya Sen and

should be presented as a separate factor

which contributes to growth of output.

In view of the criticism above, it can be

deduced that knowledge is an evitable tool

for growth in employment rate and economic

growth in general. But this knowledge should

not be taken as a separate factor since is the

already established factor-workforce (labour)

that contributes to economic growth by the

neo-classical theorists that should be

equipped with knowledge and education to

make the employed and underemployed ones

more productive and decrease the number of

unemployed ones when gained the required

knowledge of products of digital finance.

Instead the labour in the neo-classical model

could be termed skilled labour.

This study revolved around this theory since

cashless banking is seen as the combination

of cash-based banking system and electronic

banking system. Cash-based banking

employed the use of human beings (labour

force) in rendering banking services while

electronic banking employed the use of


37

electronic devices which came as a result of

technological advancement for its operation.

Therefore, digital banking system contributes

to long run growth in employment rate and

the growth of the country.

2.2.2 Acceptance Technology Model

(TAM): TAM was proposed by Fred Davis

in 1985 in his doctoral thesis at the MIT

Sloan School of Management (Ajayi, 2014).

The model suggests that when users are

presented with a new technology, a number

of factors influence their decision about how

and when they will use it. The factors are

perceived usefulness (PU) and perceived

ease-of-use (PEOU). Specifically, TAM

argued that one’s actual use of a technology

system is influenced directly or indirectly by

the user’s behavioural intentions, attitude,

perceived usefulness of the system, and

perceived ease of system. Applying this

theory in this study, TAM is an information

systems’ theory that models how users come

to accept and use new technology (ATM,

POS, Mobile phone banking and internet) in

carrying out banking transactions that will

encourage Nigerian economic growth.

2.3 Empirical Review

A cross country analysis was carried out by

Humphrey, Pully and Vesala (1996) on the

holding of cash and use of five noncash

payment instruments (check, paper giro,

electronic giro, plus credit and card payment)

in 14 developed countries, including the US

over 1987-1993, focusing on the

determinants of a country’s payment

structure and substitution among noncash

paper-based and electronic payments. The

paper-based transactions are composed of

checks and paper-based giro payments

whereas the electronic payments transactions

are made up of electronic giro, debit card

(POS) and credit card payments. Five –

equation model in log linear form was

employed for the study using Ordinary Least

Squares. The findings of the study disclosed

that there were 119 billion noncash

transactions in 1993; that the average person

initiated 165 noncash transactions per year.

Of these, 35 percent were electronic. It was

shown that a 10 percent reduction in cash

holdings is associated with a 6.8 percent rise

in noncash transactions. Hence, cash and

noncash use are negatively related, implying

that substitution between them is due more to

differences in use across countries than it is

to changes in use over seven-year time

period. Also, the study categorized the

factors identified as best explaining the

observed payment pattern into two – (1)

those that reflect payment option availability

or the consequences of past payment patterns

on the part of users; and (2) those that

measure relevant institutional, cultural or

historical differences across countries.

Specifically, Own prices (prices of related

instruments) are shown to have exerted little

influence on the use of payment methods.

While the influence of cultural and

institutional factors was found to be very

strong. Also higher per capita incomes were

found to generate more non-cash

transactions. Moreover, greater availability of

new payment instruments encourages their

use, the erosion of consumers’ sense of

security (proxy by the incidence of violent

crime) increases the use of all noncash

payments, higher banking concentration is

associated with a greater reliance on

electronic payments and the persistence of

behaviour patterns among users slows the

change in payment use.

Hasan et al (2012) examined the fundamental

relationship between the adoption of

electronic retail payments (payment cards-

mostly used on ATM machines and POS

terminals, credit transfers, direct debits,

cheques and cash proxy by cash withdrawal

through ATM) and overall economic growth

across 27 European countries from the period


38

1995 – 2009. GDP, trade and household

consumption were used as proxies for growth

in real economy the result confirm that

migration to efficient electronic retail

payments stimulates the overall economic

growth, consumption and trade. Among

different payment instruments, this

relationship is strongest for card payments,

followed by credit transfers. Cheque

payments are found to have relatively low

macroeconomic impact. Additionally, the

findings revealed that the impact of retail

payments on the real economy is more

pronounced in euro area countries.

In developing economy like Nigeria, while

analyzing the e-payment system in Nigerian

financial system, Ezeudu and Anyanwu

(2014) examined the various aspects of

cashless banking channels, the problems

facing cashless banking as well as its

advantages and disadvantages to Nigerians.

A survey instrument was used for data

collection, and a non- parametric tool of chi-

square was employed in data analysis. The

study discovered that the introduction of

cashless banking policy would automatically

reduce the number of personnel needed to

carry out the different financial transactions

in the bank. Also, Ezeudu and Anyanwu

(2014) discovered that cashless banking has a

positive effect on Nigerian economy.

In the appraisal of cashless economy policy

in development of Nigerian Economy, Okoye

and Ezejiofor (2013) examined the

significant benefits and essential elements of

cashless economy as well as the extent to

which it can enhance the growth of financial

stability in Nigeria. The study adopted the

use of questionnaire method of data

collection to elicit information from three

categories of respondents- civil servants,

businessmen and students. Analysis of

variance (ANOVA) and chi-square (X2)

statistical tools were used to test the

hypothesis one (Ho1: cashless economy

initiate will not be of significant benefits to

Nigerians) and hypothesis two (Ho2: the

adoption of the cashless economy policy

cannot enhance the growth of financial

stability in the country) respectively. The

study shows that the cashless economy

initiative will be of significant benefit to

Nigerians- the policy will help to fight

against corruption/ money laundry and

reduce the risk of carrying cash. It was also

discovered that the adoption of the cashless

economy policy can enhance the growth of

financial stability in the country.

Furthermore, Omotunde, Sunday and John-

Dewole (2013) studied the impact of cashless

economy in Nigeria. They employed the use

of survey instrument for data collection and

discovered that the introduction of cashless

economy in Nigeria can be seen as a step in

the right direction. The study further

expressed that, the impact of cashless

economy in Nigeria is expected to be felt in

modernization of Nigerian payment system,

reduction in the cost of banking services as

well as reduction in high security and safety

risks, including its stability in curbing

banking related and fostering transparency.

Also, in a research carried out by

Osazevbaru, Sakpaide and Ibubune (2014) on

cashless policy and banks’ profitability in

Nigeria, discovered that cashless economic

policy has positive impacts on banks’ profit

through reduction in cost of operations and

banking the unbanked populace.

Aiyedogbon, Obumneke and Gugong (2013)

carried out a research on the effectiveness of

cashless banking on economic growth in

Nigeria using GDP as the only variable for

measuring economic growth. The log linear

error correction model was adopted in the

study to examine how automated teller

machine (ATM), Point of sale (POS) and


39

mobile money (MM) had impacted on

Nigeria’s Gross Domestic Product (GDP).

The study discovered that ATM and POS

have significant impact on Nigerian

economic growth (1% change ATM and POS

results to 0.46% and 1.60% increase in

Nigerians GDP). It was also discovered in

their study that mobile money has not

contributed immensely to Nigerian economic

growth (1% in mobile money reduces the

GDP by 0.19%). This implies that ATM and

POS have experienced high patronage than

MM since the introduction of cashless

banking system in Nigeria and these in turn

have positively affected Nigerian GDP than

MM. This can be attributable to the policy

reduction in cash related vices like robbery,

cost of processing cash, revenue leakages

from cash handling and inefficient treasury

management through cash processing. The

low patronage of MM may be attributable to

inadequate awareness and education of the

customer on how to maximally use their

phone to transact simple banking operations.

3. METHODOLOGY

The ex-post facto research design was used.

Thus, secondary sources of data collection

were employed in this study. Data on the

independent variable, cashless banking

system measured with the total annual value

of ATM, POS, internet banking and mobile –

phone banking transactions (major e-

payment instruments) during the period of

cashless banking (2012-2018) in Nigeria

were sourced from CBN Annual Reports

(2013, 2015 and 2018). Whereas the

dependent variable, economic growth

measured with the banks’ contribution to real

gross domestic products in Nigeria was

sourced from CBN (2012-2019). The study

developed a multivariate regression model

using the two (2) categories of research

variables over the period 2012-2018. The

multivariate regression model in this study is

stated in its econometric terms as

BGDPt = β o + β 1TATMt + β 2TPOSt + β

3TMPSt + β 4TIBt + Et ----------------------------

-- (1)

Where:

TATMt indicates the aggregate value of

ATM (Automated Teller Machines)

transactions in Nigeria for each of the period

under study, TPOSt is an indicator of the

aggregate value for the POS (point of sale)

transactions in Nigeria for each of the periods

under study, TMPSt indicates the aggregate

value of electronic payments made through a

mobile device (a mobile phone) in Nigeria

for each of the period under study, TIBt is an

indicator of the aggregate value of banking

transactions via internet for each of the year

under study. β o = constant (intercept), β 1- β

4 = the coefficients of regression, that

indicate how a unit change in the independent

variables (TATM, TPOS, TMPS and TIB)

affects the dependent variable (BGDP) and E

= Error term, which is incorporated in the

equation to cater for other factors that may

influence BGDP. Finally, t = Period to be

covered by the study (t = 1,---,7 )

Data gathered were presented in tables and

analysed using multiple regression

techniques (ordinary least square regression)

of model estimation (with the aid of E-Views

10.0 econometric software). In order to

determine the overall significance of the

model (regression coefficient), F- statistics

was observed in the model and was used in

testing the hypothesis formed for this study.

4. RESULTS

4.1 Data Analysis and Interpretation of

Results

The multiple regression analysis carried out

using E-Views 10. 0 were presented in the

table below:


40

Table 4.1.1:Ordinary Least Squares Regression Result on the Effect of Cashless Banking

System on Banks’ Contribution to Real Gross Domestic Products (BGDP) in Nigeria.

Dependent Variable: BGDP

Method: Least Squares

Date: 07/15/20 Time: 15:26

Sample: 2012 2018

Included observations: 7 Variable Coefficient Std. Error t-Statistic Prob.

C 3.724672 0.993112 23.70506 0.0000

TATM 0.223749 0.353461 2.933025 0.0214

TPOS 0.153603 0.277894 3.692738 0.0148

TMPS 0.212357 0.134732 5.376145 0.0041

TIB 0.119908 0.191047 2.727638 0.0395

R-squared 0.914342 Mean dependent var 3.294286

Adjusted R-squared 0.743026 S.D. dependent var 0.035989

S.E. of regression 0.018244 Akaike info criterion -4.994154

Sum squared resid 0.000666 Schwarz criterion -5.032789

Log likelihood 22.47954 Hannan-Quinn criter. -5.471683

F-statistic 84.37156 Durbin-Watson stat 1.987865

Prob(F-statistic) 0.000000

Significant at p ≤ 0.05

Source: Researcher’scomputation, 2020 (using E-View)

The result of the regression analysis in table

4.1.1 above shows that the model for the

effect of cashless banking system (TATM,

TPOS, TMPS and TIB) on banks

contribution to real gross domestic product

in Nigeria is:

BGDP= 3.724672 + 0.223749TATM +

0.153603TPOS +0.212357TMPS +

0.119908TIB + Et

This indicates that, the intercept of

regression line (the constant value) is

3.724672 which shows that the value of

BGDP in Nigeria is 3.724672 when all the

cashless banking variables are zero. In other

words, the meaning is that, the value of

BGDP in Nigeria will be about 3.724672 in

any year which cashless banking is not

practiced in Nigeria. Also, it was observed

that TATM, TPOS, TMP and TIB have

significant positive effect on Nigeria’s

BGDP with their respective coefficient (β)

and significance values (x) of 0.223749

(0.0214), 0.153603(0.0148), 0.212357

(0.0041) and 0.119908 (0.0395). The

function thus shows that one percentage

change in TATM, TPOS, TMP and TIB

results to 0.223749, 0.153603, 0.212357 and

0.119908 percentage increase in Nigeria’s

BGDP. Furthermore, the coefficient of

determination (R-squared) of 0.914342

shows that the independent variables as a

group explained 91.4% of the variations in

the BGDP; while the remaining 8.6% can be

explained by other variables other than the

cashless banking system variables of TATM,


41

TPOS, TMPS and TIB used in this model.

The Durbin-Watson statistic of 1.987865

indicates that there is no auto-correlation

problem.

4.2 Test of Hypothesis

Ho: cashless banking system has no

significant effect on Banks contribution to

real gross domestic products in Nigeria.

In testing the hypothesis above, the data

derived on the total value of cashless

banking variables used for this study

(TATM, TPOS TMPS and TIB) and the

BGDP in Nigeria during the cashless

banking period (see Appendix) are used to

run a regression test that incorporated a F-

statistics test using E- Views 10.0 as shown

in table 4.1.1 above. The F-Statistics was

observed in the multivariate regression

model in order to determine the overall

significance of the model (regression

coefficient) and further affirm the

statistically significant effect of cashless

banking system on the dependent variables.

The result showed that there is a significant

effect of independent variables taken

together on BGDP with the f–value and

corresponding significance value of

84.37156 and 0.000000 (which is less than

5% level of significance) respectively.

Therefore, we reject the null hypothesis that

states that cashless banking system has no

significant effect on BGDP in Nigeria.

Hence, we can confidently and statistically

conclude that there is a positive and

significant effect of cashless banking system

on BGDP in Nigeria.

4.3 DISCUSSION OF RESULTS

The findings from this study are discussed

under the objective stated in this study as

shown below:

The objective of this study is to determine

the effects of cashless banking on banks’

contribution to real Nigeria’s gross domestic

products (BGDP). The result revealed in this

study as shown in table 4.1.1 disclosed that

all the explanatory variables (TATM, TPOS,

TMP and TIB) have significant positive

effect on Nigeria’s BGDP with their

respective coefficient (β) and significance

values (x) of 0.223749 (0.0214),

0.153603(0.0148), 0.212357 (0.0041) and

0.119908 (0.0395). The function thus shows

that one percentage change in TATM, TPOS,

TMP and TIB results to 0.223749, 0.153603,

0.212357 and 0.119908 percentage increase

in Nigeria’s BGDP. The positive sign and

significance of the TATM, TPOS, TMP and

TIB are attributable to the policy (cashless

policy) reduction in the risks associated with

the use of physical cash that do arise from

burglaries and theft, financial losses in fire

outbreaks and cost of processing cash.

Considering the independent variables as a

group, the study also revealed that there is a

positive and significant effect of cashless

banking on BGDP (R2= 91.4%, F- Stat.=

84.37156 and Prob(F-statistics) =

0.000000<0.05). Therefore, we can conclude

that there is a positive and significant effect

of cashless banking system on BGDP. The

implication is that an increase in cashless

banking variables increases BGDP. This

could be attributable to the reduction of the

banks operational cost (costs emanated from

cash management, movement, currency

sorting and printing) which cashless banking


42

policy has contributed. This in turn has

increased the profit performance of these

banks cum banks contribution to GDP in

Nigeria.

The results are consistent with the studies of

Aiyedogbon and Obumneke (2013), that

found out that ATM and POS have

positively impacted on Nigerian GDP

(though in disagreement with the result of

their findings in respect of Mobile money -

TMPS as represented in this study, that has

negatively impacted on GDP); and Hasan et

al (2012) who discovered that migration to

efficient electronic retails payments

stimulates the overall economic growth

(GDP), consumption and trade.

5. CONCLUTION AND

RECOMMENDATIONS

In the bid to catch up with global

developments of 21st century (technology

advancement) and to properly place the

banking sector in favourable positions for

competitions, the Nigerian banks have

widely adopted the use of electronic means

in delivery of their services and executing

their banking operations. The implication is

not that Nigerian banking system has gone to

the era where there is an outright absence of

cash transactions in the banking sectors but

the one in which banking transactions

involved both cash-based and electronic

based transactions while cash based

transactions are kept to the barest minimum

with the introduction of cashless banking

Therefore cashless banking could be seen as

the combination of cash-based banking

system and electronic banking system but

predominated with electronic based

transactions. Hence, cashless banking in

Nigeria could better be called cash-light

banking system. Though the result of this

study showed that cashless banking in

Nigeria has significantly increased Nigeria’s

economic growth, the coefficient values of

the explanatory variables are quite low,

showing that more growth could still be

achieved with further improvement in the

practice of cashless banking in Nigeria

especially now that the world grapples with

Covid-19 pandemic and its economic

meltdown. Consequence upon this, a

collaboration and cooperation of various

stakeholders like the government, CBN and

Bank’s customers were recommended to

strengthen the Nigeria’s cashless banking

system for long-term sustainability. In more

specific terms, the study recommended the

following:

1. The government should ensure the

provision of uninterrupted power supply.

Even though that the electricity in Nigeria

has been privatized, government should

ensure effective supervision of the electricity

distribution companies in the country in

order to enhance the epileptic power supply

in Nigeria. This would aid smooth operations

of digital financial activities.

2. The CBN should intensify its

enlightenment campaign to sensitize the

public on the need to use cashless banking

instruments with the understanding that more

could still be achieved in improving the

contribution of Banks to real gross domestic

products in Nigeria.

3. Bank’s customers have greater role in

accepting and using the cashless banking

instruments especially now that the Covid-19

pandemic has triggered an unprecedented


43

demand for digital economy solution

towards getting our economy back to

businesses, incomes and growth.

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Aiyedogbon, J.O., Obumneke, E. and

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APPENDIX

Data on cashless banking variables (TATM, TPOS, TMPS and TIB) and BGDP in cashless

banking period (2012-2018) in Nigeria.

Value of cashless banking Variables BGDP

(#’ billion) (#’ billion)

TATM TPOS TMPS TIB Total

2012 1,984.7 48.0 31.5 31.5 2,095.7 1,687.9

2013 2,828.9 161.0 142 .8 47.3 3,180.0 1,833.7

2014 3,679.9 312.1 339.2 74.2 4,405.4 1,982.7

2015 3,970.3 448.5 442.4 91.6 4,952.8 2,123.9

2016 4,988.1 759.0 756.9 132.4 6,636.4 2,027.5

2017 6,437.6 1,409.8 1,102.0 184.6 9,134 2,053.0

2018 6,480.1 2,383.1 1,236.1 404.6 10,503.9 2,094.7

Sources: CBN Annual report, 2013, 2015, 2018 and CBN, 2012-2019.


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