Title page

Table of contents

List of tables

List of figures



1.1     Background Information

1.2     Statement of the problem

1.3     Research questions

1.4     Scope of the study

1.5     Objectives of the study

1.6     Limitations of the study

1.7     Definition of terms        


Literature Review

2.1     Introduction

2.2     Performance (Return on asset)

2.3     Automated teller machine (ATM)

2.4     Point of sale (POS) Machine

2.5     Internet banking

2.6     Nibss Instant Payment (NIP)

2.7     Bank Focused Theory


3.0     Research Methodology

3.1    Introduction

3.2   Research Design

3.3      Population of the study

3.4      Sample Size Determination

3.5      Sampling Techniques

3.6      Research Instrument

3.7      Data Collection Procedure

3.8      Validity and reliability of data

3.9      Data Analysis


4.0     Data Analysis and Findings

4.1     Presentation of data

4.2     Test of hypothesis


5.0     Summary, Conclusion and Recommendation

5.1     Summary

  1. 2 Conclusion and Recommendation





This study examines the implications of cashless banking, with a view to exposing the possible challenges and prospects it poses to the Nigerian economy whilst employing aggregated approach. Biases the effects of cashless policy, savings and bank credit on economic growth in Nigeria deregulated economy using deposit money banks as a case study. This study is significant to Nigeria, where carrying raw cash is norm, money laundering and illiteracy is on high. It specifically sought to find out how cashless policy can mobilize and increase total domestic saving by increasing bank credit of deposit money banks injected into the Nigerian economy, and their impact on the country’s economic growth as proxies by Gross Domestic Product. Data were collected from secondary sources. The ordinary least square econometric technique was used to analyze the data. The a priori expectation is that bank credit to domestic economy should have a significant positive impact on the growth of GDP. Our findings revealed that the marginal productivity coefficient of bank credit to the domestic economy is positive but insignificant. The implication is that banks credit did not affect the productive sectors sufficiently for the latter to impact significantly on the Nigerian economy. In view of this, the paper recommended that banks should be willing to give both short and long-term loans for productive purposes as there would be more available funds with introduction of cashless policy, as this will eventually lead to economic growth. Also the regulatory body (CBN) should adopt a direct credit control that will be beneficial to the productive sector of the economy.
























1.1     Background Information

A nation should encourage a payment system that is safe, suitable and reasonable in order to encourage economic development (Ajayi & Ojo, 2006). According to a presentation by Banking and Payment System Department of Central Bank of Nigeria in July 2015, Nigeria has been lagging behind in the adoption of e-payment unlike many developed nations like Denmark, Norway, Sweden, UK, USA, France, Switzerland, Philippines, and the likes.

The payments system plays a very crucial role in any economy, being the channel through which financial resources flow from one segment of the economy to the other. It, therefore, represents the major foundation of the modern market economy. Essentially, there are three pivotal roles in the payments system, namely: the monetary policy role, the financial stability role and the overall economic role (CBN, 2015). To further improve the efficiency of the payment system, the CBN in 2004 issued the broad guidelines on electronic banking (e-banking). E-banking practice in Nigeria will continue to be promoted in line with global trend.

The Central Bank of Nigeria, as part of their ambition to be one of the best 20 economies before the year 2020, informed the world that Nigeria would commence the process of changing to a cashless economy by January 2012. “Cash Less Policy” was introduced by CBN to reduce (and not Eliminate) the amount of physical cash (notes and coins) circulating in the economy thereby encouraging the use of electronic-based platforms for settlement or payment for goods and services. The objectives of Cash Less Policy are: to drive development and modernization of our payment systems in line with vision 2020, to reduce cost of banking services, corruption, high cost of cash processing, cash-related crimes and activities of the informal economy, to drive Financial inclusion (Bringing in the unbanked into the financial system), to improve effectiveness of Monetary Policy and to properly allocate cost of processing cash to heavy cash users. The Policy content is as follows: Maximum daily cash withdrawals of N500, 000 for Individual account holders; Maximum daily cash withdrawals of N3,000,000.00 for Corporate account holders; Banks are not allowed to offer Cash-in-Transit (CIT) services to their customers. This service is solely domiciled with licensed CIT companies such as Bankers’ Warehouse etc. Third party cheques above N150,000 cannot be cashed across the counter, they must be presented through the clearinghouse or account to account Transfer; The limits of N500,000 and N3M for Individuals and Corporates respectively are cumulative and include ATM withdrawals; The limit applies to all accounts own by same customer. The penalties of for non-compliance are as follows: 3% on amounts withdrawn in excess of the set limit of N500,000 for Individual accounts (E.g. a withdrawal of N600,000 will attract 3% charge on N100,000 which translates to N3,000) ; 5% on amounts withdrawn in excess of the set limit of N3M for Corporate accounts (e.g. a withdrawal of N3.5M will attract 5% penalty on the excess of N500,000 which translates to N25,000) ; CBN to sanction banks that do not apply penalty on excess withdrawal ; CBN to sanction banks that violate the CIT directive; Charges shall apply on transactions done across the 36 states and FCT from July 1, 2014. The mode of operation of the policy is: Lagos state was used for the pilot phase which started on January 1, 2012. The policy was extended to Abia, Anambra, Kano, Ogun, Rivers and FCT in July 1, 2013. CIT services ceased from January 1, 2012. Nationwide take-off in remaining 30 states from July 1, 2014 and the policy applies to only Naira transactions. Foreign Currencies are exempted. The exemptions from the policy are: Microfinance Banks and PMIs are exempted; Ministries, Departments and Agencies (MDAs); Embassies, Diplomatic Missions and Multilateral and Aid Donor Agencies in Nigeria. The expected benefits of the policy are: Convenience and ease of payment for goods and services, reduced risk of cash related crimes, Cheaper cost of banking services and easy access to credits and Increased economic development, tax collection and greater financial inclusion.

The upsurge in Information Communication Technology (ICT) is what has made cashless banking both possible and meaningful globally. Cashless banking introduction in Nigeria has brought about changes in the banking patterns of the government, organizations, and individuals. It has thrown up so many challenges to all the parties too. Therefore, this study dissects the impact of E-banking products on the financial performances of the Deposit Money Banks in Nigeria.



The introduction of the cashless policy by the Apex bank, Central Bank of Nigeria brought e-products like the use of Automated Teller Machines (ATM), Point of Sales (POS), mobile banking, internet banking, Nibbs Electronic Funds Transfer (NEFT), Nibbs Instant Payment (NIP) transfers, and others to the fore. This became possible as a result of the rise in ICT globally. The deposit money banks invested a lot in ICT in order to face the challenges posed by cashless policy so as to remain relevant and competitive.

Prior studies like Umanhonlen , Umanhonlen and Igbinoba (2015), Osazevbaru, Sakpaide, and Ibubune (2014), Taiwo, Ayo , Afieroho and Agwu (2017), Achor (2013), Okoye and Ezejiofor (2013), Tunmibi and Falayi (2013), Ajayi (2014) , Omotunde , Sunday and John-Dewole (2013) and Ezuwore-Obodoekwe , Eyisi , Emengini and Alio (2014) focused on the prospects , challenges, and benefits of the policy, concentrating on whether the policy has achieved the stated objectives actually outlined by the CBN at the time of introducing the policy. Alagh and Ene (2014), Shehu, Aliyu and Musa (2013), Oladejo ((2016), Ngango (2015), Obiekwe and Anyanwaokoro (2017) actually used the e-banking products to proxy cashless banking and found that they are positively related to the performance of banks. Abaenewe, Ogbulu, and Ndugbu (2013) found that the adoption of electronic banking has positively and significantly improved the returns on equity (ROE) of Nigerian banks. On the other hand and on the contrary, it also revealed that e-banking has not significantly improved the returns on assets (ROA) of Nigerian banks.



  1. How do you rate the monetary policy of the central banks?
  2. What is the difference between Regulatory reserves and Statutory reserves in banking context?
  3. Who Know about: Modern methods of marketing for banking?
  4. Has the importance of improving IT risk management processes and information transfer on the internet been growing in recent years?
  5. Is it possible to combine the ethics of banking procedures in the field of banking operations with the sources of financial crises?
  6. Does the development of new information technologies affect the processes of improving Internet banking security systems?
  7. Determinants of the development of mobile banking?
  8. Digital banking adoption in small countries; do you know of successful cases?
  9. Can Conventional banking and Islamic Banking be run by the same authority in the same institution?


1.4     SCOPE OF THE STUDY     

This research work is design to look into the impact of cashless policy on the Growth of Deposit Money Banks (DMBS) in Nigeria.



The main objective of this study is to ascertain the effect of the Central Bank of Nigeria Cashless Policy on the Performance of Deposit Money Banks in Nigeria. The specific objectives are to:

  1. Determine the effect of ATM transactions on the return on asset of Deposit Money Banks in Nigeria.
  2. Investigate the extent to which POS transactions enhance the return on asset of Deposit Money Banks in Nigeria.
  3. Ascertain the degree to which Internet banking transaction influences the return on asset of Deposit Money Banks in Nigeria.
  4. Determine how NEFT Transfers improves the return on asset of Deposit Money Banks in Nigeria.
  5. Examine the extent to which NIP transaction affect the Return of assets Deposit Money Banks in Nigeria.



The cashless economy is a large component with lot of diverse and sometimes complex parts. This study will only focus on major growth components such as the saving mobilization for investment in infrastructures, income growth and poverty alleviation. This study will cover all the facets that make up the cashless policy, but shall empirically investigate the effect of the major ones. The empirical investigation of the impact of the saving mobilization on the macroeconomic variables in Nigeria



DEPOSIT: deposit is a financial term that means money held at a bank. A deposit is a transaction involving a transfer of money to another party for safekeeping. However, a deposit can refer to a portion of money used as security or collateral for the delivery of a good.

MONEY: Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context.

BANK: A bank is a financial institution that accepts deposits and recurring accounts from the people and creates a demand deposit. Lending activities can be performed either directly or indirectly through capital markets.

CASHLESS:cashless society describes an economic state whereby financial transactions are not conducted with money in the form of physical banknotes or coins, but rather through the transfer of digital information (usually an electronic representation of money) between the transacting parties.

GROWTH: The growth of something such as an industry, organization, or idea is its development in size, wealth, or importance.

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