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ABSTRACT
The study examines the impact of financial innovations on the Demand for Money in Nigeria due to the increase growth of financial innovation in financial service delivery. The study employed quarterly time series data covering the period of 36 quarters (2010Q1-2018Q4). The Engel and Granger co-integration model was used to ascertain if there’s an equilibrium long run relationship between the variables. This study also uses the Error Correction Mechanism (ECM) to determine the impact of financial innovations, real gross domestic product and treasury bills rate on the demand for money in Nigeria. The result of the study shows that there exist a short run and long run relationship between the variables of the study and that financial innovations have a significant impact on the demand for money in Nigeria. On the strength of this evidence, this research recommends that the Nigerian monetary authorities have to make favourable policies that will attract more users of financial innovations which would lead to growth in the financial sector and ultimately economy. The monetary authorities and financial service providers will have to review the e-payment services especially ATM in order to ensure efficiency. Financial service providers should improve on the speed and convenience of transactions carried out using the different financial innovations because this will affect people’s spending and by implication the demand for money. The study concluded that the monetary authorities should therefore take into consideration the implications of financial innovations when formulating policies.
