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ABSTRACT
Numerous studies have been carried out on the effect of online payments mechanisms on the performance of the traditional banking sector at different times in different countries albeit with mixed findings. Therefore, this study has empirically investigated the effect of online payments mechanisms on the traditional banking sector in Nigeria for the period 2000-2021. The variables considered are commercial banks' return on assets (ROA), a proxy for financial performance of deposit money banks, as the dependent variable while value of automated teller machine transactions (ATM ), value of mobile payments (MOBV), value of point of sale transactions (POSV) and value of web/internet payment transactions (NETV) as the independent variables for the study. Augmented Dickey-fuller (ADF) test was used for the unit root test and the variables were found to have mixed order of integration and as a result, the Autoregressive Distributed Lag (ARDL) was the main estimation technique employed for this study. Then Johansen (1988) technique was used to establish if the stationary variables are cointegrated. Further, ECM is employed to correct any form of disequilibrium in the short run. The result of the stationarity and normality test reveals that the model is fairly well specified and could be used for policy analysis. The analysis was based on data extracted from the Central Bank of Nigeria (CBN) statistical bulletin and World Development Indicators (WDI). The result of the analysis shows that all the variables were statistically significant at 5%. The results reveal that there is, overall, a positive and significant effect of mobile banking on the performance of the banking sector in Nigeria. The study therefore suggests that financial literacy and the expansion of digital identification should be encouraged among others.
