Effect of Financial Innovations on Economic Growth in Nigeria

Abstract

This study examines the effect of financial innovations on economic growth in Nigeria from 2009 to 2024. Economic growth was measured by real GDP, while ATM and NEFT transactions served as proxies for financial innovations. The study employed an ex post facto research design and utilized quarterly time series data sourced from the CBN’s statistical bulletin. Descriptive statistics were used to summarize the data, while the ARDL model was applied to estimate the relationship between financial innovations and economic growth. The results showed that ATM had a positive and significant effect on economic growth in Nigeria, while NEFT had no significant effect on growth. Based on these findings, the study recommended upgrading ATM networks with advanced features to enhance efficiency and address short-run liquidity gaps. Furthermore, stronger collaboration between banks and fintech firms was recommended to improve the reliability and accessibility of digital payment platforms, thereby maximizing their contribution to economic growth. Also, the Central Bank of Nigeria (CBN) and other financial regulators should strengthen the linkage between digital payment systems and the real economy, thereby promoting wider access to financial services, particularly among rural and informal sector participants, to ensure that the benefits of NEFT extend beyond the formal banking sector.