American International Journal of Economics and Finance Research

Vol. 1, No. 1; 2019

Published by American Center of Science and Education, USA

Effect of Information and Communication Technology on the Nigerian

Economy: Evidence from the Banking Sector

Okanta, Sunday Ukeje Ph.D

Department of Banking and Finance

Abia State University, Uturu Nigeria

Email: [email protected]

Received: December 26, 2018 Accepted: January 10, 2019 Online Published: January 24, 2019

ABSTRACT

This paper investigated the impact of information and communication technology on the Nigerian economy, taking
evidence from the banking sector. Ordinary least squares method of regression for the period 2004-2017 was
employed. Generally, the paper found that there was positive relationship between bank related information and
communication technology components used and economic growth, except the automated teller machine
component, under a fixed effect modeling. However, using the Breusch Godfrey (BG) dynamic modeling to remove
serial autocorrelation, the paper revealed that only the mobile banking payment component positively and
significantly affected the gross domestic product. On the basis of the findings, the researcher recommended that the
Central Bank of Nigeria, banks and stakeholders should collaborate to strengthen the information and
communication infrastructures and security systems in the country to reduce frauds, make the environment user
friendly and improve public confidence.

Keywords: Information and communication technology, bank performance, economic growth.

1. INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Information has always played a prominent role in human life but the emergence of social progress and the vigorous
development in science and technology has immeasurably increased the role of information in every facet of human
endeavor. The rapid expansions of mass, diversified information have been termed „information explosion‟ and this
has given rise to a scientific approach to information, its most characteristics and changes in interpretation of the
concept of information. Information explosion was broadened to include information exchange not only among men
but also among machines as well as the exchange of signals in the animal and plant world.
The pace of changes brought by new information technology has had a significant effect on the way people live,
work and play globally. Today‟s business environment is very dynamic and it experiences rapid changes as a result
of information creativity, innovation, technological changes, increased awareness and demand from customers.

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Every organization, industry and government uses information technology to convert its input in the computer
hardware into output to attain its organizational objectives, structures and strategic goals (Robert and Murrell, 2007).
The quality of strategic planning is limited by the quality of Information and Communication Technology available
to the decision makers. Organizations like the Nigerian banking sector are not an exception.
Information and communication technology (ICT) is one of the resources needed in the banking sector for effective
management. It can significantly improve the ability of the manager to monitor individual or team performance and
allow employees to have more complete information to make faster decisions.
Information and communication technology services can offer banks and their customers a unified access to
manage their personal financial information. The adoption of information and communication technology (ICT) by
these banks can increased their operational efficiencies, reduce costs through high utilization rates in the ICT
environment to ensure compliance with changing time and for competitive advantage (Haqqani, 2003).
Methods of handling financial services have changed from old manual transactions and data processing to a faster,
more effective and efficient electronic data processing and Electronic Fund Transfers (EFT). Deposits, withdrawals,
bills-pay-in, purchase of draft, value for cheques, third party transactions, funds transfer and inquiries, which are all
done electronically within seconds.
The adoption of information and communication technology can also help banks to keep pace with changing
customer needs and market dynamics and create a competitive differentiation in products and services. The
competitive nature of the banking system, its products and services have made it necessary for banks to embrace
ICT world as quick as possible since this medium of banking in most countries, has proven to be very efficiency-
friendly. Indeed, the impact of ICT has reshaped the banking industry in terms of providing and delivering effective
services to enhance its operations and general performance, and to a greater extent the economic growth of nations.
Countless observers have suggested that efficient and sound banking in a knowledge-driven economy is a key to
future economic growth. Banks with efficient ICT environment could play a larger role in economic growth. Wih a
relatively high premium in innovation, ICT-driven banks can transform the economy. For Nigeria, it would appear
that the banking ICT-soundness is imperative if the country is to hold its own against regional competitors. This
research paper is therefore, an attempt to access the impact of information and communication technology on the
Nigerian Economy, taking evidence from the banking sector.

1.2 STATEMENT OF THE PROBLEM

Information and communication technology has become a potential tool in the hands of banks for sustainable
growth. It has revolutionized the banking industry and its advent has enormously increased the capabilities of banks
as they are now able to offer wider range of services to their customers through internet banking, mobile banking,
ATMs, etc. Despite all these innovations in the banking industry, it is highly disheartening to observe that banks are
still finding it difficult to meet the expectations of their customers as regards service delivery in Nigeria. It is not
uncommon to find long queues in banks, delay in attending to customers, inability to properly sort out transaction
and customer‟s general loss of trust in banks. Also, banks have found it difficult to meet up with its overall
objectives and responsibilities.

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Concerns about the strength and durability of the Nigerian economic recovery from recent economic recessions and
growth slow-down, uncertain prospects for bank corporate profitability in the midst of unsettled political conditions
and rise in e-banking frauds, this paper evaluates the impact of the banking sector‟s ICT related activities on the
economic growth over the last one decade. The interest of the researcher is to see if the banking sector, through its
ICT-driven activity, has made a significant impact on the main growth index of the Nigerian economy over the
years.

1.3 OBJECTIVE OF THE STUDY

The aim of this study is to assess the impact of Information and Communication Technology on the Nigerian
economy, using evidence from the banking sector. Specifically, the objectives are to:
 Determine how Automated Teller Machine affects the aggregate economic performance of Nigeria.
 Investigate how Mobile banking impact on Nigeria‟s economic growth.
 Assess the effect of Nigerian Inter-Bank Settlement System on the economic growth of Nigeria.
 Examine the relationship between National Electronic Fund Transfer and economic growth in Nigeria.

1.4 RESEARCH QUESTIONS

In the light of the preceding objectives, the study sought to answer the following questions:
 `To what extent does the adoption of mobile banking influence economic growth in Nigeria?
 To what extent has Automated Teller Machine banking influenced the economic performance in
Nigeria?
 How does National Electronic Fund Transfer affect Nigeria‟s economic growth?
 What is the impact of Nigeria Inter-Bank Settlement System on Nigeria‟s economic growth?
1.5 HYPOTHESES
Ho1: The adoption of mobile banking has no significant effect on Nigeria‟s economic performance.
Ho2: There is no significant impact of Automated Teller Machine banking on Nigeria‟s economic growth.
Ho3: There is no significant and positive relationship between National Electronic Fund Transfer and the Nigerian
economic growth.
Ho4:The Nigerian Inter-Bank Settlement System has no impact on Nigeria‟s economic growth.

1.6 SIGNIFICANCE OF THE STUDY

Every organization is concerned with the best possible way of improving performance to guarantee sustainable
growth that will lead to the achievement of organizational goals. Therefore, the knowledge that would be obtained
from this research will assist management of organizations and banks to appreciate the importance and use of
information and communication technology products to achieve overall efficiency and effectiveness in their
operations. The bank could get hints on how to further deploy information technology to enhance profitability,
operational efficiency and service delivery. This paper would contribute positively to policy framework with which
proper system upgrades could be carried out by the Nigerian government.

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Students of management sciences and other researchers who intend to carry out further studies would find this paper
useful as a reference material. Finally, it is hoped that the conclusion arrived at would assist other organizations in
their ICT applications so as to meet their desired organizational goals and objectives.

1.7 SCOPE AND JUSTIFICATION OF THE STUDY

The paper covers the banking sector that trades their shares on the floor of the Nigerian Stock Exchange. The
performance values of their ATM, e-banking and mobile services were selected for 13 years each between 2004 and
2017. The researcher selected the years because they coincided with the beginning of recapitalization and post-ICT
policy of the deposit money banks (DMBs) in Nigeria. The study is justified in the fact that the Nigerian banks,
since 1980s, have continued to perform better in their investment profiles and in the use of ICT than the rest of the
industrial sectors of the economy. The various studies of the African Development Consulting Group (ADCG) on
ICT diffusion in Nigeria shows that banks have invested more in ICT, have more personnel, more installed bases for
PCs and internets than any other sector of the economy Woherem, 2000).

1.8 LIMITATIONS OF THE PAPER

In this paper, the researcher is limited to the use of Central Bank of Nigeria (CBN) Statistical Bulletin aggregated
data on the banks‟ ICT indices. The researcher is also limited by secrecy of information of the banks‟ individual ICT
portfolios, which require permission of the banks‟ highest authorities; hence most information was regarded as
classified information.
This paper takes a greater, keen interest in the study of the aggregated data simply to reduce the risk of
generalization bias and inconsistency inherent in the use of disaggregated data. Such a bias is an imperfect target for
a policy aimed at aggregate measure (Bryan and Cocchetti, 1993). The fact that the banking sector is a major focal
point in CBN‟s economic policy, the results of this work cannot be biased in terms of policy generalization. Using a
simple statistical framework, the paper analyzed a panel data that is immune to the bias inherent in aggregated data
set used in generalizing a research policy. Generally, the paper is limited to the assessment of the impact of
ICT on the Nigerian economy taking evidence from the ICT performance of the banking sector.

2. REVIEW OF RELATED LITERATURE

2.1 CONCEPTUAL FRAMEWORK

Information and communication technology (ICT) is a mechanism for aiding and coordinating collective decisions
in the light of the overall objectives of the banking sector. It is a branch of engineering dealing with the use of
computers and telecommunications equipment to store, retrieve, transmit, and manipulate data. The information
technology association of America has defined information technology as “the study, design, development
application, implementation, support or management of computer based information systems”. The term is
commonly used as a synonym for computers and computer networks, but it also encompasses other information
distribution technologies such as television and telephones. Stewart (1977) , opines that information technology is a
process requiring a specific body of knowledge, skills and procedures which serve as cultural trade turn for attaining
set objective in an efficient and timely manner.

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According to Ayatse (2006), Information Technology include all those computer base activity that are derived from
the convergence discipline of micro-electronics, computer and telecommunication which have led to the
organization of process of production, distribution and circulation in the society.
Banking is defined as a financial institution where money and other valuables are kept for safe keeping. It is the
granting of monetary loans, accepting deposits, purchasing and selling of short-term securities, bills, cheques,
incurring of the obligation to acquire claims in respect of loans and effecting transfers and clearing of such with the
Central Bank. Longman‟s dictionary defines a bank as a business that keeps and lends money, and provides other
financial services. The Business Dictionary also defines a bank as any financial institution offering financial services
such as keeping of money, conversion of domestic currencies into foreign currencies, lending of money at interest
and acceptance of bills of exchange on behalf of their customers which may include private/individual businesses,
organizations and even the government.
From these definitions above, we can conclude that banking is the act of providing the following services: Receipt of
funds from customers for safe keeping, provision/ extension of credit/loan facilities to clients, assurance of
guarantees and facilities of international transactions, and engagement in debt factoring and equipment leasing.

2.2 THE THEORIES

THEORY OF PLANNED BEHAVIOUR (TPB): This is also known as the theory of reasoned action (TRA). The
theory suggests that a human behavior is determined by intention to perform. The behavior is affected jointly by
attitude, subjective norm and perceived control (Ajzen, 1991). The desirability or undesirability of an attitude
expresses the perceived organizational or a social pressure of a person who intends to perform a specific behaviour.
BANK−FOCUSED THEORY: This theory anchors on the premise that banks use non−traditional but conventional
low−cost delivery channels to offer services to their customers. Such channels include the automated teller machines
(ATM), mobile phone banking, and point of sale (POS) among others. In using these channels, banks offer a wide
range of services to their customers regardless of location and branch attachments. All that is required is to enter the
needed information into the system and the transaction is done.
BANK−LED THEORY: The bank−led theory was postulated by Lyman, et al (2006), and it emphasizes the role of
an agent who acts as a link between the bank and the customers. In this case the retail agents have direct interactions
with the bank customers and they perform the role expected of the bank by either paying cash or collecting deposits.
Finally, this agent is expected to transmit all his dealings with the bank customer to the bank he is representing
through electronic means (such as phones, internet, etc).
NON BANK−LED THEORY: This theory was popularized by Hogan (1991). Here customers do not deal with any
bank and they do not maintain any bank account. All that the customers have to deal with is a non−bank firm such
as mobile network operator or prepaid card issuer who they exchange their cash with for e−money account. The
e−money account is then stored in the server of this non−bank agent. This tends to represent the most risky platform
in the electronic payment methods because of lack of existing regulatory framework upon which these e−agents
operate.

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2.3 INFORMATION AND COMMUNICATION TECHNOLOGY, BANKING SECTOR AND THE

ECONOMY.
Banking has come of age. Competition has allowed banks to start looking for innovation that will keep their
customers and even win more. In recent years, the financial sector has been an interesting case for service
innovation as it moves towards using the web for commercial purposes through internet services. Information and
communication technology is all about automation. Essentially, information technology puts an end to manual
operations, applying electronic mechanization to hordes of statistical operations among others. Today, information
technology has become a key element in economic development, and the banks contribute in terms of operations,
quality delivery and productivity of services (Agboola, 2003). Therefore, taking advantage of information and
communication technology is an increasing challenge to developing countries. There is now growing evidence that
knowledge driven innovation is a decisive factor in the competiveness of nations, industries, organizations and
firms. Organizations like the banking sector, have benefited substantially from e-banking which is one among the
information technology applications of strengthening the competitiveness of the organizations. The current trend in
the application of information and communication technology in the banking industry in Nigeria has given an
insight into how quality banking has been enhanced via information technology.
The development of information and communication technology facilities in the Nigerian banking industry has
brought about fundamental changes in the content and quality of banking process in the country. This analysis and
clarification of how Nigerian banks have used information and communication technology to reengineer their
operations is detailed in subsequent literature reviews and observations.
Another major area where the role of information technology has tremendously assisted the banking sector is the
provision of various financial services. Money transfer locally and internationally are made possible by information
technology. Money gram and western union and other money transfer operators are run internationally. The western
money transfer operator, as a common information technology in the Nigeria banking landscape, has enjoyed a
significant patronage in the provision of source of foreign exchange for the banking system.
According to Ovia (2005), the introduction of smart card, plastic money and ATM debit/credit cards further
extended human ingenuity and imagination within the family of ICT. He observed that information technology has
led to reduction in cash transaction with long-term prospect of minimum cash handling and the subsequent reduction
in robbery risk and such other vices. He further stated that fund transaction was faster, more accurate and cheaper
under ICT.
According to Wali, (2010) the relationship between ICT and the various organizational activities is similar to
government and civil servants. While governments outline policies civil servants execute those policies. ICT acts as
a tool for the actualization of various organizational policy activities. This means that the banking sectors
implements and enforces government policies in the use of ICT in their organizations.
Banks and the Government cannot ignore information systems because they play a critical role in contemporary
economies. The application of information and communication technology concepts and techniques, policies and
implementation strategies to banking services has become a subject of fundamental importance and concern to all
banks and indeed a prerequisite for local and global competitiveness. ICT directly affects how managers make
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decisions, how they plan and what products and services are offered in the industry. It has continued to change the
way banks and their corporate relationships are organized worldwide and the variety of innovative devices available
to enhance the speed and quality of service delivery.
The emerging of computer and telecommunication after about four decades of applying computers to routine data
processing, mainly in information storage and retrieval, has created a new development where information has
become the engine of growth around the world. This development has created catch-up opportunities for developing
countries such as Nigeria to attain desired level of development without necessarily “reinventing the wheels” of
economic growth. This new technology has brought far-reaching impacts on societies, which has tremendously
transformed most banking businesses (Ovia, 2005).
Brucher, et al. (2003), opined that ICT adoption has improve three critical domains which are efficiency, quality and
transparency in the banks. Agboola and Adodeji (2002), discussed the dimensions in which automation in banking
industry manifest in Nigeria. They include; bankers Automated Clearing services, Automated payment systems and
Automated Delivery Channels.
2.4 TYPES OF ICT USES IN BANKS
There are many examples of information applications in the banking industry that has helped build new markets and
fuel the economy (Okpaku, 2003). The following are relevant applications of information technology in the
operation of banking industry: Electronic Fund Transfer (EFT), Telephone banking or telex-banking, Internet
banking, online real time banking, Personal computer banking (pc-banking), Automated Teller Machine (ATM), etc.
Below is a brief explanation and meaning of each type and how it functions:

ELECTRONIC FUND TRANSFER

Banks and other financial institutions began to offer electronic fund transfer services to customers through
Automated Teller Machines (ATM) in 1989. At the same time efforts were made to introduce the use of debit cards
at point of sale. Through the installation of highly sophisticated computer systems for network data communication
in the banks, the banks have been able to provide data linkage amongst their branches, thereby making it possible to
connect numerous customers nationwide.

TELEPHONE BANKING
New technologies have been harmonized with established practices. The idea of harmonization is fast becoming
popular. Customers can perform a number of transactions anywhere they have access to network data using phones.
All a customer needs to do is to download the application in his phone. As said earlier, to use a financial institution‟s
telephone banking facility, a customer is required to download the application in his phone. This type of financial
transaction which a customer may transact through telephone banking include obtaining account balances and list of
latest transactions, electronic bill payments, and funds transfer between a customer or another account. Cash
withdrawals and deposits require the customers to visit an automated teller machine.
ONLINE REAL TIME BANKING
This aspect of electronic banking allows a customer to transact business in any branch, irrespective of the branch the
customer‟s account remains domiciled. A computer works online if input data is processed immediately (real time
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processing operation mode) and offline if there is significant time period between input and output and processing
time.

PERSONAL COMPUTER BANKING

Personal computer banking allows customers access information on their accounts through a dial-up connection with
their banks. Customers can perform basically all the transactions that are available to them with telephone banking.
However, this enables the customers to access their accounts, in some specific cases, download information and
manipulate it in their own financial management software. This is especially beneficial for business customers with
reconciling their statements, checking deposits and cheques that have to be cleared and so on.

AUTOMATED TELLER MACHINE (ATM)

The ATM performs self-service and related services around the clock to holders of smart cards. The automated teller
machine can perform any function depending on the application installed by the acquirer (Owner). Any ATM
system can allow cash transaction at any time and place including non-working hours and days, that is, 24 hours, 7
days of the week to perform any of the banking services. They are usually installed in banks and busy locations
where people can have access to them. The system also allows for the withdrawal of cash and purchase of airtime
(recharge vouchers).
Here customers do not deal with any bank and they do not maintain any bank account. All that the customers have to
deal with is a non−bank firm such as mobile network operator or prepaid card issuer who they exchange their cash
with for e−money account. The e−money account is then stored in the server of this non−bank agent. This tends to
represent the most risky platform in the electronic payment methods because of lack of existing regulatory
framework upon which these e−agents operate.

2.5. EMPIRICAL STUDIES

Saeid (2011) investigated the effect of information technology (IT) on the banking system of Bank Keshavarzi, Iran,
using data obtained both through the customers and employees, using exact % and the 5-point Likert Scale. He
found that IT contributed to the banking system through conspicuously customer and employee‟s time savings,
cutting down expenses and facilitating network transactions.

Elena and Beccalli (2003) studied the influence of IT (in terms of hardware, software and IT services) on the
performance of banks and found that there is an insignificant positive correlation and the existence of a productivity
paradox.

Using an annual data of selected commercial banks in Nigeria for an eleven-year period (2001-2011), Abubakar and
Haruna (2014) studied the impact of ICT on bank performance and economic growth. Applying the ordinary least
squares (OLS) models, they found that the use of ICT from the random effect did not improve bank performance,
hence the economy.

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Moradi and Kebryaee (2007) investigated the impact of ICT on economic growth in fourty-eight Islamic countries.
Using the standard Solow Growth model, Steady-state, Income Regression and Economic Growth Regression, they
found out that ICT capital (ICT investment) had positive and significant effect on economic growth when modeled
on non-ICT control variables of inflation, economic openness and population growth index.

Cron ad Sobol (1983) examined the relationship between computerization and several measures of overall medical
wholesalers‟ performance. Using correlation analysis the results showed that computerization was related to overall
performance of users. However, non-users tended to be small firms with average overall performance.

Alpar and Kim (1990) utilized 424-759 US banks during 1979-1986 to analyze the impact of IT on economic
performance. Applying cost functions approach, they found that IT was able to reduce operating costs, increase
capital expenditures of banks, save personnel costs, reduce demand deposits and increase time deposits.

3. RESEARCH METHODOLOGY
3.1 DATA

Secondary data were used in the course of this research work. Data were primarily collected from the banks‟
financial reports. Generally, they were sourced from CBN Statistical Bulletins (various years). As stated in the
introductory section of this paper, the banking sector was chosen based on the fact that the sector seems to exact
more impact on the economy than any other sector in Nigeria.

3.2 MODEL SPECIFICATION

The model specification in this work is time series analysis. The basic model specification is shown thus: Y = f (X 1,
X2, X3, ….Xn )….Equation 1, where Y= aggregated Nigeria‟s nominal gross domestic products (GDP) and X 1, X2,
X3,….Xn represent the banks‟ aggregated ICT components. Rewriting equation 1, we have GDP = f (Bank ICT
performance components)….Equation 2.

In further explanation, the specification is: GDP = f (Bank‟s ATM, MB, NEFT, NIBSS) ….. Equation 3, where
ATM=Automated Teller Machine; MB= Mobile Banking; NEFT= National electronic fund transfer; and NIBSS =
Nigerian inter-bank settlement system.

Establishing a linear relationship, we rewrite equation 3 as:

Y1 = a0 +a1 (ATM) +a2 (MB) + a3 (NIBSS)+a4(NEFT)+e1, that is,

GDP = a0 + a1(ATM) + a2(MB) + a3(NIBSS) + a4(NEFT) + et.....Equation4.

The a priori expectation is that, all things being equal, the Nigerian economy is dependent on the banking sector‟s
information and communication technology over the years.

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The data, as presented in the model specification above, were analyzed using multiple regression analysis. The E-
View computer software package was used to do the analysis.

4 DATA PRESENTATION, ANALYSIS AND INTERPRETATION

TABLE 1 NIGERIAN BANKING SECTOR ICT AND ECONOMIC GROWTH INDICES

Year GDP ATMV MPV NIBSSV NEFTV

2004 17321.3 17321.3 261.1 15.3 1.1

2005 22270.1 299.1 1.1 21.2 1.3

2006 28662.5 265.2 1.3 12.1 1.2

2007 32995.4 108.2 1.5 11.4 25.6

2008 39157.9 204.1 2.1 111.5 51.1

2009 44285.6 548.6 1.3 201.5 2501.3

2010 54612.3 399.7 6.7 230.1 5661.5

2011 62980.4 1561.7 19 1,300.20 10511.1

2012 71713.9 1984.7 31.5 3891.1 13660.1

2013 80092.6 2828.9 142.8 10844.9 14307.3

2014 89043.6 3679.9 346.5 19921.5 14616.6

2015 94145.1 3970.3 442.4 25649.1 13087.1

2016 115042.3 7561.1 650.2 29581.2 14212.3

2017 194135.5 6440.1 592.8 37111.3 18203.4

Source: CBN Statistical Bulletins (various years)

Table 1 above shows the economic growth indicator, GDP, in nominal value (N‟billion) and the ICT indices – ATM,
MB, NIBSS, NEFT – in billion naira. The large values of the indices were transformed into logged values, thereby
reducing the largeness into smaller values (see table 2).

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TABLE 2 LOGGED VALUES OF DATA FOR REGRESSION

Year LATMV LGDP LMPV LNEFTV LNIBSSV

2004 5.56490 9. 75969 0.33647 0.09531 2.40694

2005 5.70077 10.01100 0.09531 0.26236 3.05400

2006 5.58048 10.26334 0.26236 0.18232 2.49320

2007 4.68490 10.40412 0.40546 3.24259 2.43361

2008 5.31861 10.57535 0.74193 3.93378 4.71402

2009 6.30736 10.69841 0.26236 7.82456 5.30578

2010 5.99071 10.90801 1.90210 8.64144 5.43851

2011 7.35353 11.05057 2.94443 9.26018 7.17027

2012 7.59322 11.18043 3.44998 9.52223 8.26644

2013 7.94764 11.29093 4.96144 9.56852 9.29145

2014 8.21064 11.39688 5.84988 9.58991 9.89955

2015 8.28659 11.45259 6.09221 9.47938 10.15226

2016 8.93077 11.6505 6.47728 9.56186 10.29489

2017 8.77029 12.17631 6.38485 9.80936 10.52167

SOURCE: E-VIEW COMPUTATION

In table 2, the ATM value dropped from 8.93077 billion in 2016 to 8.77029 billion in 2017. Also there was a slight
drop in the mobile payment value from 6.47728 billion in 2016 to 6.38485 billion in the year 2017. In the case of
NEFT value and NIBSS value, they all experienced a rise in the total value at the end of the years 2016 and 2017. In
spite of the drop experienced in both ATM and MP values in 2017, the Gross Domestic Product (GDP) didn‟t drop
in value.

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CHART 1 LGDP Variable

Chart 1 shows the behavior of logged GDP over the period of study. It showed an increasing trend with time. It has
no intercept. This feature of LGDP behavior is exploited in conducting further tests.
CHART 2. LATMV Variable

Chart 2 also shows a fluctuating behavior of LATMV. On the average, there was a rising trend of LATMV over the
study period, with no defined intercept.

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CHART 3. LMPV Variable

Chart 3 shows that there was a major leap in the trend of LMPV from 2009. The trend has no intercept.
CHART 4. LNEFTV Variable

Chart 4 shows the non-linear trend of LNEFTV over the study period. A major leap started in 2006 but became
almost flat at the top from 2011. The variable has no intercept.
CHART 5. LNIBSSV Variable

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Chart 5 shows a Chart 5fluctuating trend of LNIBSSV variable over the period of study. It has no intercept.
Table 3: Descriptive Statistics and Normality Test
ATMV GDP MPV NEFTV NIBSSV
Mean 6.874319 10.91577 2.868866 6.498132 6.531618
Median 6.830450 10.97930 2.423273 8.950816 6.304394
Maximum 8.930772 12.17631 6.477280 9.809364 10.52168
Minimum 4.684905 9.759692 0.095310 0.095310 2.406945
Std. Dev. 1.430015 0.672934 2.610479 4.002856 3.207916
Skewness 0.034779 -0.000916 0.274940 -0.743417 -0.065475
Kurtosis 1.521544 2.304151 1.389873 1 .798268 1 .423775
Jarque-Bera 1.277891 0.282456 1.688678 2.131989 1 .459286
Probability 0.527849 0.868291 0.429841 0.344385 0.482081
Sum 96.24047 152.8207 40.16413 90.97385 91.44265
Sum Sq. Dev. 26.58424 5.886925 88.58979 208.2971 133.7794
Observations 14 14 14 14 14
From table 3, the normality test, using skewness, kurtosis and Jargue-Bera tests, is used to establish the normal
distribution of error terms. The skewness coefficients of the variables approximated to zero, showing normally
distributed variables. The Kurtosis, which is expected to be 3, falls below 3, an indication of non-normality of the
variables. Based on the OLS residuals, the computed p-values of LATMV, LGDP LMPV and LNIBSSV are
sufficiently or reasonably high, we do not reject the normality assumption.

CHART 6: Residual Diagnostic Histogram Test.

With the chart above, we observe the estimated residuals from the regression. The residuals from the GDP
regression seem to be asymmetrically distributed. The Jargue- Bera (JB) test shows that the JB- statistic is about
3.3663, and the probability of obtaining such a statistic under the normality assumption is about 19%. Therefore, we
reject the H0 that the error terms are not normally distributed.

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Table 4: Correlation Matrix

Table 4 gives us the correlation matrix (zero- order correlation or pair-wise correlation). On the main diagonal are
the correlations of the variables with themselves. This is always 1 by definition. Off the main diagonal are the pair-
wise correlations among the variables. Taking the first row of the table, 0.892435 is the correlation between
LATMV and LGDP, 0.954011, is the correlation between LATMV and LMPV, and so on.
As observed above, all the pair-wise correlations are quite high, suggesting that there may be a severe collinearity
problem. However, we must bear in mind that such pair-wise correlations may be sufficient but not a necessary
condition for the existence of multicollinearity (Gujarati; 2013). Again, the fact that R2 in the OLS model is high and
the explanatory variables are statistically insignificant is an indication of less classic symptoms of multicollinearity.

Table 5: OLS Model

The results of the OLS model estimation are shown as follows:

GDP= 10.222-0.070ATMV+0.119MPV+0.060NEFTV+0.68NIBSSV

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Se: 0.891 0.203 0.116 0.048 0.161

t-stat: 11.467 -0.344 1.029 1.256 0.421
p-value: 0.000 0.738 0.331 0.241 0.684
R2: 0.914
Adjusted R2: 0.875
Durbin-Watson (DW): 0.866
F-stat- 23.834
In the above OLS estimations, the regression coefficients are not statistically significant, except the intercept or
autonomous variable. The p-values show that 0.05% level. This means that the growth of ICT in the banking sector,
on its own, could not influence economic growth in Nigeria. R2, a summary measure, shows that the proportion of
the variation in GDP explained by the variables – MV, MPV, NEFTV and NIBSSV jointly - is 91%. When the
researcher adjusted for the degree of freedom (df) associated with the sum of squares entering the model, involving
four parameters of the independent variables and the intercept term, the adjusted R2 was 88%. Since adjusted R2
followed the convention that adjusted R2 < R2 and that it is another summary statistic of R2, the high goodness of fit
and adequacy of the regression model are proven.
The Durbin-Watson (DW) test result of 0.866 is low suggesting that we have positive serial correlation (pure
autocorrelation) in the residuals of the error terms. The presence of auto correlation in our model is an indication of
the lack of efficiency of our OLS estimators, and this renders our OLS model spurious and nonsensical.
Table 6

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To avoid some of the pitfalls in the model as exemplified by the low DW test result of the presence of serial
autocorrelation, the researcher further applied the Breusch-Godfrey Serial Correlation LM Residual Diagnostics
Test. Simply called BG test or the LM test, the test is based on the Lagrange Multiplier Principle. The test is general
in the sense that it allows for (1) nonstochastic regressors, such as the lagged values of the regressand, (2) higher-
order autoregressive schemes, such as AR (1), AR (2), etc, and (3) simple or higher-order moving averages of
white-noise error terms, (Godfrey, 1978; Gujarati; 2013). Using an AR (6) scheme (see table 6 above), the
researcher obtained the following results: R2= 0.927 and adjusted R2= 0.682. The prob. chi-square value, 0.0435, is
significant. Therefore, for our model, at least, one of the 6 auto correlations must be nonzero.
Varying lag lengths from 1 to 6, the researcher found that AR (2) and AR (6) coefficient are significant, all
suggesting that there is no need to consider more than two lag. The DW has improved to 3.181, removing serial auto
correlation in the model. At this level, only MPV coefficient is significant, implying a high influence on GDP.
The model that gave us the result or finding, as shown above, and one devoid of serial autocorrelation and
spuriousity (or nonsensical estimations) is:
LGDP = −1.5837+0.0176LATMV−0.60475LMPV−0.10859LNEFTV+0.59008LNIBSSV+0..02225R(−1)
−1.5892 R(−2) −1.67148R(−3)+0.52638 R(−4) +0.39542 R(−5) −1.66797 R(−6)
2
R = 93%
Adjusted R2 = 68%
In the above model the coefficients of three (3) variables - LMPV, Resid(- 2) and Resid ( - 6) - are significant, while
the coefficients of the remaining five (5) are not significant. This is an over-parametarized model in which less than
50% of the variable coefficients are significant.
TABLE

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So far, the researcher has looked at the dependence of LGDP on the Banking Sector ICT (independent) variables.
However, dependence does not necessarily imply causation or direction of influence. The question is: Is GDP, over
time, affecting or causing changes in the banking sector ICT? From table 7 above, the following relationships are
shown:

S/N Direction of Causality F-Value P-value Decision

1 GDP ATMV 3.59 0.084 Do not reject H0

LATMV GDP 0.09 0.913 Do not reject H0

2 GDP MPV 1.98 0.208 Do not reject H0

MPV GDP 4.70 0.051 Do not reject H0

3 GDP NEFTV 0.07 0.936 Do not reject H0

NEFTV GDP 3.11 0.108 Do not reject H0

4 GDP NIBSSV 8.48 0.0135 Reject H0

NIBSSV GDP 0.22 0.808 Do not reject H0

These results suggest that the direction of causality is from GDPNIBSSV since the estimated F-stat is significant
at the 5% level. This indicates that there is a reverse causation between GDP and NIBSSV.

4. DISCUSSION OF FINDINGS
The result of this study revealed that most of the bank- related ICT indices used have positive influence on the
Nigerian economy, except the automated teller machine. In the first instance, using a fixed effect OLS model (table
5), none of the ICT indices was statistically significant in influencing GDP, except the autonomous variable. The
presence of serial autocorrelation in the model (table 5) rendered the analysis spurious and biased. When the serial
autocorrelation was removed, using BG dynamic tests, only one of the ICT indices, mobile payment, statistically
influenced GDP.
It is not surprising that, most bank-related ICT indices did not impact significantly on the Nigerian economy. In the
first instance, the banking sector ICT related activities may be insignificant in the aggregated ICT uses in Nigeria.
This is an indication that Nigerians are yet to embrace total e-banking, even in this 21st century. Probably, the rising
ICT related frauds and fraudster activities scare Nigerians. Analogue banking still persists.

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Our results are consistent with the works of Abubakar and Haruna (2014) and Elena (2007). However, they are not
in line with the works of Moradi and Kebryaee (2007), Cron and Sobol (1983) and Alpar and KIM (1990). The
inconsistence could be traced to development index differentials between Nigeria and developed countries.
5. RECOMMENDATIONS
Since our findings indicated that mobile payments statistically influenced the GDP, the banks, as a matter of
urgency, should strengthen their ICT systems, security and integrity. This is capable of boosting public confidence
in e−payments and reduction of frauds.

The Central Bank of Nigeria and banks should collaborate with stakeholders to ensure that ICT infrastructures and
internet availability that show weak relationships with bank and economic performances are strengthened and made
customer user friendly. Finally, there is need for careful and constant monitoring of sector developments and
stakeholder consultation in order to fine tune ICT policy for desired effects on the economy.

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