IDEAS home Printed from https://ideas.repec.org/a/bjc/journl/v10y2023i10p23-36.html
   My bibliography  Save this article

Impact of Financial Innovation on the Competitiveness of Deposit Money Banks in Nigeria

Author

Listed:
  • AYODELE, Oluwafemi Godwin

    (Department of Finance, Redeemer’s University, Ede, Nigeria)

  • AFOLABI, Taofeek Sola

    (Department of Finance, Redeemer’s University, Ede, Nigeria)

Abstract

The world has changed dramatically, since the industrial revolution and innovation is now at the forefront of every industry. Scholars have identified innovation as a critical factor that aids economic expansion, accelerates financial development and facilitates investment diversification. However, despite the undeniable importance of financial innovation in fostering growth, questions remain on whether such innovation boosts competitiveness among banks in Nigeria. Therefore, this study investigated the impact of financial innovation on the competitiveness of Deposit Money Banks (DMBs) in Nigeria. Ninety-six bank officers were randomly selected from the twenty-four DMBs in Nigeria, to provide responses to a structured questionnaire, developed in line with the objectives of the study. A Structural Equation Model (SEM) was used to specify the relationship between the dimensions of financial innovation (mobile banking, internet banking, ATM banking & CBN digital currency) and banks’ competitiveness. The model assessment was done using the standard factor loading, composite reliability, construct and the discriminant validity tests. The Partial Least Squares (PLS) technique was further used to estimate the model parameters and test the research hypotheses, via the Smart-PLS 3 statistical software. The results revealed that both internet banking and CBN digital currency directly and significantly affect banks’ competitiveness. The study concludes that internet banking and CBN digital currency are key financial innovation tools influencing competitiveness among DMBs in Nigeria. Therefore, it is recommended that management and stakeholders in Nigerian DMBs should encourage frequent usage of their internet banking platforms by making it more customer-friendly and enhancing its safety features. Furthermore, the government should by way of policy encourage businesses and individuals to embrace the E-naira for carrying out financial transactions.

Suggested Citation

  • AYODELE, Oluwafemi Godwin & AFOLABI, Taofeek Sola, 2023. "Impact of Financial Innovation on the Competitiveness of Deposit Money Banks in Nigeria," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 10(10), pages 23-36, October.
    • Handle: RePEc:bjc:journl:v:10:y:2023:i:10:p:23-36
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijrsi/digital-library/volume-10-issue-10/23-36.pdf
    Download Restriction: no
    File URL: https://rsisinternational.org/journals/ijrsi/articles/impact-of-financial-innovation-on-the-competitiveness-of-deposit-money-banks-in-nigeria/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Alex Bara & Gift Mugano & Pierre Le Roux, 2016. "Financial innovation and economic growth in the SADC," African Journal of Science, Technology, Innovation and Development, Taylor & Francis Journals, vol. 8(5-6), pages 483-495, December.
    2. repec:rza:wpaper:627 is not listed on IDEAS
    3. Hernando, Ignacio & Nieto, Maria J., 2007. "Is the Internet delivery channel changing banks' performance? The case of Spanish banks," Journal of Banking & Finance, Elsevier, vol. 31(4), pages 1083-1099, April.
    4. Md. Qamruzzaman & Jianguo Wei, 2019. "Financial Innovation and Financial Inclusion Nexus in South Asian Countries: Evidence from Symmetric and Asymmetric Panel Investigation," IJFS, MDPI, vol. 7(4), pages 1-27, October.
    5. Josiah Aduda & Nancy Kingoo, 2012. "The Relationship between Electronic Banking and Financial Performance among Commercial Banks in Kenya," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 1(3), pages 1-6.
    6. Peter W. Roberts & Raphael Amit, 2003. "The Dynamics of Innovative Activity and Competitive Advantage: The Case of Australian Retail Banking, 1981 to 1995," Organization Science, INFORMS, vol. 14(2), pages 107-122, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:ers:journl:v:volumexxi:y:2018:i:issue4:p:435-458 is not listed on IDEAS
    2. Md. Imran Hossain, 2021. "Effects of E-Banking Adoption on the Financial Performance of State-Owned Commercial Banks in Bangladesh," Information Resources Management Journal (IRMJ), IGI Global, vol. 34(4), pages 1-20, October.
    3. Lavinia Mihaela Gutu, 2014. "The impact of Internet technology on the Romanian banks performance," Proceedings of International Academic Conferences 0702397, International Institute of Social and Economic Sciences.
    4. R.M. Mahboub, 2018. "The Impact of Information and Communication Technology Investments on the Performance of Lebanese Banks," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 435-458.
    5. Md. Imran Hossain, 2021. "Effects of E-Banking Adoption on the Financial Performance of State-Owned Commercial Banks in Bangladesh," Information Resources Management Journal (IRMJ), IGI Global, vol. 34(4), pages 93-112, October.
    6. Chang, Yuan-Chieh & Chen, Min-Nan, 2016. "Service regime and innovation clusters: An empirical study from service firms in Taiwan," Research Policy, Elsevier, vol. 45(9), pages 1845-1857.
    7. Donal G. MCKILLOP & Barry QUINN, 2015. "Web Adoption By Irish Credit Unions: Performance Implications," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 86(3), pages 421-443, September.
    8. Shaohua Yang & Zeyun Li & Yaxin Ma & Xingxing Chen, 2018. "Does Electronic Banking Really Improve Bank Performance? Evidence in China," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(2), pages 82-94, February.
    9. Rim Zouari‐Hadiji, 2023. "Financial innovation characteristics and banking performance: The mediating effect of risk management," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1214-1227, April.
    10. Mogotsinyana MAPHARING & Elang BASUHI, 2017. "Electronic Banking and Bank Performance: Botswana Context," International Journal of Emerging Trends in Social Sciences, Scientific Publishing Institute, vol. 1(1), pages 84-93.
    11. Adamantia Pateli & Naoum Mylonas & Aggeliki Spyrou, 2020. "Organizational Adoption of Social Media in the Hospitality Industry: An Integrated Approach Based on DIT and TOE Frameworks," Sustainability, MDPI, vol. 12(17), pages 1-20, September.
    12. Jian-Hang Wang & Yu-Hsien Wu & Phil Yihsing Yang & Hsiang-Yi Hsu, 2023. "Sustainable Innovation and Firm Performance Driven by FinTech Policies: Moderating Effect of Capital Adequacy Ratio," Sustainability, MDPI, vol. 15(11), pages 1-15, May.
    13. Hervas-Oliver, Jose-Luis & Sempere-Ripoll, Francisca, 2015. "Disentangling the influence of technological process and product innovations," Journal of Business Research, Elsevier, vol. 68(1), pages 109-118.
    14. Luning Shao & Jianxin You & Tao Xu & Yilei Shao, 2020. "Non-Parametric Model for Evaluating the Performance of Chinese Commercial Banks’ Product Innovation," Sustainability, MDPI, vol. 12(4), pages 1-15, February.
    15. Vossen, Alexander & Ihl, Christoph, 2020. "More than words! How narrative anchoring and enrichment help to balance differentiation and conformity of entrepreneurial products," Journal of Business Venturing, Elsevier, vol. 35(6).
    16. Diaz-Di­az, Nieves Lidia & Aguiar-Di­az, Inmaculada & De Saá-Pérez, Petra, 2008. "The effect of technological knowledge assets on performance: The innovative choice in Spanish firms," Research Policy, Elsevier, vol. 37(9), pages 1515-1529, October.
    17. Tarziján, Jorge & Brahm, Francisco & Daiber, Luis Felipe, 2008. "Entrepreneurial profitability and persistence: Chile versus the U.S.A," Journal of Business Research, Elsevier, vol. 61(6), pages 599-608, June.
    18. Turner, Karynne L. & Monti, Alberto & Annosi, Maria Carmela, 2021. "Disentangling the effects of organizational controls on innovation," European Management Journal, Elsevier, vol. 39(1), pages 57-69.
    19. Samuel Afriyie & Jianguo Duo & Kingsley Appiah & Abdul-Aziz Ibn Musah, 2018. "The Nexus between Types of Innovation and Marketing Performance of SME in an Emerging Economy," International Review of Management and Marketing, Econjournals, vol. 8(6), pages 78-92.
    20. Buhr, Helena & Funk, Russell J. & Owen-Smith, Jason, 2021. "The authenticity premium: Balancing conformity and innovation in high technology industries," Research Policy, Elsevier, vol. 50(1).
    21. Valipour Pasha , Mohammad & Bastanzad , Hossein, 2017. "E-Banking Impact on the Profit Margin of Banks in Iran," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 12(2), pages 193-211, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bjc:journl:v:10:y:2023:i:10:p:23-36. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Renu Malsaria (email available below). General contact details of provider: https://rsisinternational.org/journals/ijrsi/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.