Estimated Effect of Digital Finance and Liquidity Management of Commercial Banks in Nigeria

Vollständiger Abstract

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The study was motivated to examine the effect of digital finance on the liquidity management of commercial banks in Nigeria. The objective was to examine the effect of digital finance on liquidity of commercial banks. Time series data were source from Central Bank of Nigeria Statistical Bulletin. Liquidity management proxy by loan to deposit ratio was used as dependent variable while Automated Teller Machine as percentage of money supply, Digital fund transfer as percentage of money supply, Mobile banking as percentage of money supply and Point of sale transactions as percentage of money supply were used as independent variables. Ordinary least square was adopted as data analysis methods. Findings of the study revealed that 79.7 and 58.5 percent variation in the liquidity of commercial banks were explained by variation in the digital finance variables. The study also found that the model is significant based the value of f-statistics and probability while the Durbin Watson statistic proved the absence of negative autocorrelation among the variables. The study further revealed that ATM and DFTR have negative and significant effect on the liquidity management of the commercial banks while POST and MB have positive and significant effect on the liquidity management practices of the commercial banks. From the findings, the study concludes significant relationship between digital finance and liquidity of commercial banks. It therefore recommends that the application of the automated teller machine should be well integrated and the policy directed toward achieving liquidity of commercial banks in Nigeria. Transaction using the automated teller machine should be matched with inflow of cash in the banking industry. The use of the mobile banking in digital financial transaction should be monitored and well managed to avert the negative effect on the liquidity management practice of the commercial banks.