Financial Innovation and Demand for Money in Nigeria

Joshua Nsikak Jonah, Idaka Sunday Egbe and Eja Basil Richard
Additional contact information
Joshua Nsikak Jonah: Statistics Department, Central Bank of Nigeria (CBN), Abuja, Nigeria
Idaka Sunday Egbe: Department of Accounting, Faculty of Management Sciences, University of Calabar, Calabar, Nigeria
Eja Basil Richard: Department of Banking and Finance, Faculty of Management Sciences, University of Calabar, Calabar, Nigeria

International Journal of Economics and Financial Research, 2020, vol. 6, issue 12, 257-268

Abstract: This study examined the impact of financial innovation on money demand in Nigeria, using quarterly time series for the period 2009-2019. The dependent variable was money demand, represented by broad money, while the independent variable was financial innovation represented by modern payment channels such as volume of Automated Teller Machines (ATMs) transactions, volume of Point of Sales (POS) transactions, volume of Internet banking transactions, and volume of Mobile banking transactions. The study employed the ordinary least squares (OLS) regression technique as the estimation method within the cointegration, granger causality, and error correction modeling. The result obtained showed that financial innovation has mixed impact on money demand in Nigeria during the period of analysis. For instance, financial innovation has positive impact on money demand through volume of ATM transactions in the current period, two periods lagged of volume of mobile banking transactions, current period and one period lagged of volume of internet banking transactions, and current period’s volume of Point of Sales (POS) transactions in Nigeria. On the other hand, financial innovation has negative impact on money demand through one period lagged of volume of point of sales in Nigeria. On the stability of the demand for money function, the result of the stability tests based on the CUSUM test and CUSUM of squares test showed that the demand for money function was stable during the evaluation period. The study recommended that monetary policy strategy of the central bank of Nigeria (CBN) should be fine-tuned to ensure it is well suited to deal with the challenges posed by financial innovation by way of proliferation of sophisticated payment channels.

Keywords: Financial innovation; Demand for money; Financial products; Nigeria. (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.arpgweb.com/pdf-files/ijefr6(12)257-268.pdf (application/pdf)
https://www.arpgweb.com/journal/5/archive/12-2020/12/6 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arp:ijefrr:2020:p:257-268

Access Statistics for this article

International Journal of Economics and Financial Research is currently edited by Dr. Abu Hassan Bin Md Isa

More articles in International Journal of Economics and Financial Research from Academic Research Publishing Group Rahim Yar Khan 64200, Punjab, Pakistan.
Bibliographic data for series maintained by Managing Editor ().