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Digital Financial Services and Economic Growth in Nigeria

Azubuike, Thankgod Chimene., Amadi, Chukuemeka Robert, Amadi, Sonny, Nwanodi and, Momodu, Ayodele, Augustine

Abstract

This study examines the effect of digital financial services on economic growth in Nigeria, measured by real GDP per capita growth. Specifically, it investigates the effects of ATM transactions, POS transactions, mobile payment transactions, and internet penetration using the Autoregressive Distributed Lag approach. Quarterly data were sourced from the Central Bank of Nigeria, World Bank, United Nations Development Programme, and National Bureau of Statistics. The study employed descriptive statistics, KPSS unit root tests, ARDL bounds cointegration tests, ARDL estimation, Granger causality tests, and diagnostic tests. The results revealed mixed orders of integration and confirmed the existence of long-run relationships between digital financial services and economic growth indicator. The findings reveal mixed short-run effects: internet penetration and POS transactions have significant positive effects on real GDP per capita growth, while ATM and mobile payment transactions exert significant negative effects. In the long run, the effects of all four digital financial service indicators are statistically insignificant. The significant error-correction term indicates that approximately 72% of short-run deviations from long-run equilibrium are corrected annually. The study concludes that digital financial services contribute more strongly to short-run than long-run economic growth in Nigeria and recommends among others that the government should invest in reliable and affordable internet infrastructure, particularly in underserved communities.

Keywords

Digital Financial ServicesEconomic GrowthAutomated Teller MachinePoint- of-SaleMobile paymentsInternet Penetration.

References

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