The Link between Electronic Transactions and Stock Market Performance in the Nigerian Financial Ecosystem

Abstract

The electronic payment system involves transactions carried out via the aid of technology. The Nigerian economy have seen it as a welcome development and among other objectives to promote cashless economy. Ina process to achieve rapid transformation, the Central Bank of Nigeria (CBN) launched the financial inclusion strategies for all sundries through the help of the Financial Technology (FIN Tech). This study assessed the linkages of electronic transactions and stock market performance in the Nigerian financial ecosystem. The study employed WEB, Automated Teller Machine (ATM), Nibss Instant Payment (NIP), and Point of Sale (POS) as the electronic transactions’ channels and its link to stock market capitalization in Nigeria. The study adopted quarterly data between 2012 and 2019. The Vector Error Correction Model was applied for the evaluations, including the Johansen Co-integration. The short-run error correction shows that, the ATM and WEB were negatively and insignificantly linked to stock market performance. The findings also showed that, POS is positively but not significantly linked to stock market performance. The findings further revealed that NIP is positively and significantly linked to stock market capitalization. In essence among the study variables, NIP was the only constituted and significant variable that influenced the stock market performance in the Nigerian financial ecosystem. The study recommended the Central Bank of Nigeria (CBN) to monitor, control and report the movement of all money via NIP, as well as re-double the awareness campaign with regards to use of ATM,WEB and POS.