THE EFFECT OF CASHLESS POLICY ON THE PROFITABILITY OF COMMERCIAL BANKS IN NIGERIA. 2006-2013

Abstract

Using time series data for the period 2006-2013, this study examined the effect of cashless banking on the profitability of commercial banks in Nigeria. Data were collected from secondary sources though annual reports sand statistical bulletin of Central Bank of Nigeria. The effect of Cashless Banking was measured using the tool return on equity of commercial banks and A TM, POS and internet transactions in Nigeria. Return on equity was regressed on ATM, POS and internet transactions using multiple regression technique. The study revealed that positive relationships exist ROE and ATM usages, and also between ROE and POS usages. On the other hand, there was a negative relationship between ROE and IT. It was discovered that the existing business environment in Nigeria poses a challenge to the smooth running of Cashless Banking. It is therefore recommended that banks that want to improve their profitability, performance and efficiency must offer numerous products/services through mobile phones and the internet in an efficient and cost effective manner and create awareness of the availability of these services. They must also make mobile banking application all mobile phones enabled so that those customers who cannot afford Java enabled mobile phones can also use the product.