Effect of Agent Banking on Banking Sector Efficiency in Nigeria
Abstract
This study examined the effect of agent banking on banking sector efficiency in Nigeria. To achieve this objective, relevant data used spanning from 2009-2022 were sourced from Central Bank of Nigeria Statistical Bulletin, for the period under review. Descriptive statistics, Augmented Dickey Fuller (ADF) test, Granger causality and Ordinary Least Square (OLS) were the analytical tools for this study. Return on Equity (ROE) as a proxy for banking sector efficiency was used as the dependent variable while Automated Teller Machine (ATM), Mobile Banking (MOB), Point-of-Sale terminal (POS) and Web/internet banking (WEB) as independent variables proxied for agent banking as the independent variables. Based on the analysis, the variables were stationary at their respective levels, the F-statistic of the regression output stood at 0.609231, this implies that the regression plane was not statistically significant, R2 = 0.213075 implies that about 21.31% of the total variation was accounted for by the independent variables, the variables does not granger cause each other. Durbin-Watson statistic of approximately 2.02 showed the absence of autocorrelation or serial correlation in the model specified. The variables showed negative association with ROE, and were not statistically significant as the P-values of 0.6248, 0.6954, 0.4469, and 0.5495 for ATM, MOB, POS, and WEB respectively, were greater than the intended 0.05 level of significance. Also, the overall level of significance, Prob.(F-Statistic) 0.666344 is greater than the 0.05 level of significance, indicating that all the independent variables cannot jointly influence the dependent variable for the period under review. The study concluded that though, the variables were stationary at their respective levels, but has not contributed positively and significantly to banking sector efficiency in Nigeria. The study therefore recommended that the migration of our normal banking system to agent banking system would require some reform and a lot of effort and sensitization especially for low income customers, who are currently deeply rooted in using cash and see it as a convenient and easy way of receiving and making payments