The Role Of E-Payment Systems On Economic Growth In Nigeria

ABSTRACT

This study investigates the role of e-payment systems on economic growth in Nigeria

over the period of 2010-2018. Specifically, the study analyses the role of e-payment

systems on economic growth using value of e-payment transactions and volume of epayment

transactions. The study used quarterly time series data for value of POS,

ATM, mobile, Internet transactions and real GDP for model 1 and volume of POS,

ATM, mobile, internet transactions and real GDP for model 2. The multiple

regression analysis, Johansen cointegration test, Granger causality test and Vector

error correction model (VECM) were employed in this study. The results of the

multiple regression analysis for model 1 and 2, shows that ATM and internet

transactions is positive and insignificantly related to economic growth while there is

a negative and insignificant relationship between POS transactions and real GDP in

Nigeria. The result also shows that volume of mobile transactions is positive and

significantly related to economic growth while value of mobile transactions is positive

but insignificantly related to economic growth in Nigeria. The Granger causality test

for model 1 shows the existence of a unidirectional causal relationship between value

of POS, ATM and mobile transactions and real GDP. The granger causality test for

model 2, shows there is a unidirectional causal relationship from volume of POS,

mobile and internet transactions to real GDP. The Johansen cointegration test for

both model 1 and 2, establishes the existence of a long run equilibrium relationship

between e-payment systems and economic growth in Nigeria. The vector error

correction model (VECM) results for model 1 and 2 shows the existence of a short run

relationship between e-payment systems and economic growth in Nigeria. The study

recommends the government invest in communication and internet infrastructure,

internet security as well as awareness campaigns in order to capture a higher

percentage of the population on these e-payment platforms and increase the number

of banked in the population which will boost aggregate consumption, employment,

trade and increase government revenues which would lead to an increase in

economic growth.