Testing the Nexus between Financial Inclusion and Banks’ Performance in Nigeria: The Role of Financial Technology

The study examined the relationship between selected financial inclusion/technology variables and banks’ performance in Nigeria for the period of ten years with specific objective of determining the extent to which financial inclusion/technology has deepened the performance of banks in Nigeria. The study relied on Point of Sales (POS) Transactions, Automated Teller Machine (ATM) Transaction, Mobile Bank Payment (MBP) Transactions and Bank liquidity (BLQ) as control variable. Return-on-Asset (ROA) was proxied for bank performance. Semi-annual data were sourced from the Central Bank of Nigeria (CBN) statistical bulletin for the period 2009 to 2019. The study employed the Autoregressive Distributed Lag (ARDL) modelling technique. Empirical results from the study revealed that financial technology variables (POS, ATM) had positive effect on bank performance in the long-run. While mobile banking payment (MBP) has negative and significant effect on bank performance, POS was significant, ATM was not significant in the long-run. In the short-run, empirical result showed that financial technology was highly significant in determining bank performance in Nigeria. The study therefore recommends that the Central Bank of Nigeria (CBN) should put in place policies that drive financial inclusion through banks products and services that are digitally enhanced, hence, providing high returns on investment.