Naira Digitalization and Financial Stability of Selected Deposit Money Bank in Nigeria: Are Nigeria Bank Ready?

Abstract

Deposit money banks play significant role in achieving sound financial system digitalization through implementation of online banking policy enacted by the financial system regulators. Financial system digitalization improves banks customer transactions which makes more income available to deposit money banks and thus enhanced bank financial stability. Despite positive contribution of digitalization of financial system to commercial banks, there still exist problem of perceived information security risks and perceived flop in government policy on digitalization of financial system among populace or banks customers in Nigeria. Survey research design and regression method of analysis was employed through Structural Equation Modelling via SmartPls 3.0 and reliability results ranged between 0.716 to 0.798 as well as Average Variance Explained (AVE) for validity was greater than 0.5, thus items in the instruments were reliable and valid. Findings revealed that e-Naira, populace perceived security and perceived government policy of digital currency have positive and significant influence on bank financial stability of deposit money banks in Nigeria. The study recommended that the Central Bank of Nigeria continue to emphasize the advantages of e-Naira and ensure the information security of bank customers in order to encourage the public or bank customers to adopt it. As a result, deposit money banks would be able to collect more transaction fees, increasing the financial stability of Nigerian banks.

Keywords

• bank financial stability
• digital currency
• e-naira
• populace perceived security
• perceived government policy