THE RELATIONSHIP BETWEEN ELECTRONIC BANKING AND NIGERIAN

BANK PERFORMANCE

ABDULLAHI BALIQEES OMOWUNMI

20/BFN/1461

BEING A PROJECT SUBMITTED TO THE DEPARTMENT OF BANKING

AND FINANCE, FACULTY OF FINANCIAL STUDIES, OSUN STATE
POLYTECHNIC, IREE IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE AWARD OF HIGHER NATIONAL DIPLOMA
(HND) IN BANKING AND FINANCE.

OCTOBER, 2022

i
 CERTIFICATION PAGE

This is to certify that this research work was carried out by ABDULLAHI BALIQEES
OMOWUNMI with Matric Number 20/BFN/1461 in Partial Fulfillment of the
Requirement for the Award of Higher National Diploma (HND) in Banking and Finance.

________________________ ________________________

Mrs Adedokun Date

Supervisor

________________________ ________________________

Mrs. O. A. Babalola Date

Head of Department

ii
 DEDICATION
I dedicate this project to Almighty God, most beneficent and the most merciful, and also to

my caring parents Mr and Mrs Abdullahi for their love and support ever since the day I was

born. And also to my Brother Olatunde Thank you for always been there for me. I am

grateful to you have as my family

iii
 ACKNOWLEDGEMENT

First and foremost my sincere appreciation goes to almighty God for seeing me through this

HND program.

my acknowledge goes to my supervisor Mrs Adedokun who out of this tight schedule still

shared her valued time with constructive criticism for this project, you are well appreciated ma.

My appreciation also goes to my amiable H.O.D Mrs Babalola O.A for her moral and academic

support and also to all the lecturers in the department of banking and finance.

I am indeed grateful to my caring parents Mr and Mrs Abdullahi for their encouragement and

word of advice throughout this period of this course. May almighty God preserve and keep them

to eat fruits of their labour. I, also appreciate Oluronbi Olaide and Mr Samod and contribution

of my friends , and my brothers sisters. I am happy and blessed to have you all.

iv
 TABLE OF CONTENTS

Title......................................................................................................................................i

Declaration..........................................................................................................................ii

Certification.......................................................................................................................iii

Dedication..........................................................................................................................iv

Acknowledgement..............................................................................................................v

Table of Contents..............................................................................................................vi

List of Tables....................................................................................................................vii

Abstract...........................................................................................................................viii

CHAPTER ONE:INTRODUCTION...............................................................................1

1.1 Background to the Study..............................................................................................1

1.2 Statement of the Problem.............................................................................................2

1.3 Objectives of the Study ...............................................................................................4

1.4 Research Questions......................................................................................................5

1.5 Research Hypotheses...................................................................................................5

1.6 Scope of the study........................................................................................................6

1.7 Significance of the study..............................................................................................6

1.8 Definition of Terms......................................................................................................6

CHAPTER TWO: LITERATURE REVIEW.................................................................8

2.1 Conceptual Review...................................................................................……… 8

2.1.1 Electronic Banking (e-banking)................................................................................8

2.1.2 Automated Teller Machine ......................................................................................8

2.1.3 Point of Sale (POS).................................................................................................10

v
 2.1.4 Mobile Banking......................................................................................................10

2.1.5 NIBSS Instant Payment (NIP)................................................................................10

2.1.6 Bank Performance..................................................................................................10

2.2 Theoretical Review..................................................................................................11

2.2.1 Diffusion of Innovation Theory..............................................................................11

2.2.2 Technology Acceptance Model(TAM)..................................................................12

2.3 Empirical Review......................................................................................................13

CHAPTER THREE:RESEARCH METHODOLOGY................................................19

3.1 Research Design...........................................................................................................19

3.2 Study Population and Sample Size..............................................................................19

3.3 Method of Data Collection...........................................................................................19

3.4 Method of Data Analysis..............................................................................................19

3.5 Measurement of Variables...........................................................................................20

3.6 Model Specification ....................................................................................................21

CHAPTERFOUR: DATA PRESENTATION AND ANALYSIS................................22

4.0 Introduction .................................................................................................................22

4.1 Descriptive Statistics...................................................................................................22

4.2 Interpretation of Results..............................................................................................24

4.3 Test of Hypotheses......................................................................................................28

4.4 Discussion of Findings................................................................................................29

CHAPTERFIVE: SUMMARY,CONCLUSIONAND RECOMMENDATIONS…...32

5.1 Summary......................................................................................................................32

5.2 Conclusion...................................................................................................................33
vi
5.3 Recommendations........................................................................................................34

5.4 Limitations of the Study...............................................................................................35

REFERECES....................................................................................................................36

APPENDICES..................................................................................................................40

vii
 LIST OF TABLES

Table 4.1: Descriptive Statistics........................................................................................22

Table 4.2: F-Bound Test....................................................................................................25
Table 4.3: Short run estimation.........................................................................................26
Table 4.4:Long run estimation..........................................................................................27

viii
 Abstract

The study examined the relationship between electronic banking and Nigerian bank performance
on a monthly basis for a period of 8 years, that is, 2012-2019. Secondary data was collected
from CBN Statistical Database. The study employed a time series research design. The study
adopted bank performance as dependent variable, whereas POS, ATM, Mobile banking and NIP
transactions represent independent variables. Descriptive statistics was used to summarize the
data whereas the Autoregressive Distributed Lag (ARDL) approach revealed the existence of co-
integration, long run, and short run dynamics through the use of an Error Correction Model
(ECM). The outcome of ARDL bound test analysis shows that banking sector performance is in
cointegration with electronic banking in Nigeria. This implies that a long run deterministic
trend exist between Banking Sector stock price index and ATM. POS, Mobile Banking and the
NIP simultaneously. However, a parsimonious short-run investigation using Error Correction
analysis shows that there is short-run relationship between electronic banking and the
performance of banking sector in the country except for the mobile banking variable. Thus, the
study concluded that there is significant relationship between electronic banking and Nigerian
bank performance. The study recommended that there is need for banks to improve on the
monitoring of the e-banking regulations in the country in terms of charges on POS, unresolved
failed transactions and unwarranted proliferation of POS. Also, banks should also ensure steady
availability of cash on all ATMs and improve on the network connectivity of all ATM terminals
so that customers can be assured of getting cash anytime. Lastly, adequate security measures
should also be provided at ATM terminals such as the presence of security men at ATM
terminals and the installation of adequate surveillance camera.

ix