Corresponding Author's : Folami, Rahmon Abiodun

Co-Author's : Ilo, Bamidele Muzliu , Somoye, Russell Olukayode Christopher

Abstract :

The dynamic realm of financial services has experienced a notable increase in innovative payment transactions, which are altering the dynamics of the banking sector. In this context, this research investigates the intricate connection between payment innovation transactions and the risk-adjusted profitability of Deposit Money Banks (DMBs) in Nigeria. The motivation for this study stems from the increasing importance of payment innovations in modern banking, necessitating a comprehensive investigation into their impact on bank profitability within the Nigerian context. To address this research inquiry, a descriptive research design was employed, facilitating a systematic exploration of the topic. Secondary data spanning from 2013 to 2022 were meticulously collected from the annual financial reports of fourteen listed DMBs in Nigeria, resulting in a dataset of 140 observations. A panel analysis approach utilizing Dynamic Generalized Method of Moments (D-GMM) was adopted to rigorously evaluate the intricate relationship between payment innovations and risk-adjusted profitability. The empirical findings illuminate several key insights. Notably, ATM banking emerges as a pivotal player, wielding a positive coefficient of 0.7105 and a highly significant probability value of 0.0007 concerning its impact on Risk-Adjusted Net Interest Margin (RANIM). This finding underscores the substantial influence of ATM banking in augmenting the profitability metric of Nigerian DMBs, signifying its potential as a driver of enhanced financial performance. This study provides compelling evidence that payment innovation transactions, particularly through ATM banking, significantly influence the risk-adjusted profitability of DMBs in Nigeria. These findings hold implications for strategic decision-making within the banking industry, urging stakeholders to harness the power of payment innovations to optimize profitability. To this end, it is recommended that DMBs in Nigeria continue to invest in and leverage payment innovation channels, with a keen focus on ATM banking, to sustain and enhance their risk-adjusted profitability in a dynamically evolving financial landscape.

Keywords :

Payment Innovation, Risk-Adjusted Profitability ,Deposit Money Banks, ATM Banking, Transactions.

Article Details

Unique Paper ID: 91

Publication Volume & Issue: VOLUME 3 - 2023 , ISSUE 4

Page(s): 7-20

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