Financial Technology and Bank Liquidity in Nigeria: An Empirical Analysis of Digital Transactions
Financial Technology and Bank Liquidity in Nigeria: An Empirical Analysis of Digital Transactions

Summary/Abstract: Financial technology (FinTech) has transformed the banking industry by introducing innovative digital transaction methods that enhance financial service delivery and efficiency. This study investigates the impact of FinTech adoption on bank liquidity in Nigeria, focusing on four major transaction channels: Automated Teller Machine (ATM) transactions, Point of Sale (POS) transactions, Unstructured Supplementary Service Data (USSD) transactions, and mobile banking transactions. Using panel data from five leading Nigerian banks covering the period 2020–2023, this study employs a panel regression model to analyze the relationship between FinTech transactions and bank liquidity. The findings reveal that ATM and POS transactions have a negative impact on bank liquidity, implying that increased usage of these services contributes to liquidity outflows. Conversely, mobile banking transactions significantly enhance liquidity by facilitating seamless digital transactions and reducing the need for cash withdrawals. USSD transactions, however, do not show a statistically significant effect on liquidity, suggesting that their impact remains minimal within the Nigerian banking sector. This study contributes to the growing body of literature on FinTech adoption and liquidity management in developing economies. It provides valuable insights for financial institutions, policymakers, and regulators on how to optimize FinTech usage while ensuring adequate liquidity management. Based on these findings, the study recommends enhancing mobile banking infrastructure, regulating ATM and POS withdrawals, promoting the use of USSD transactions, strengthening liquidity management strategies, and fostering regulatory support for FinTech expansion.

• Details
• Contents