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Cover page   -           -           -           -           -           -           -           -           -           i

Title page      -           -           -           -           -           -           -           -           -           ii

Certification -           -           -           -           -           -           -           -           -           iii

Dedication    -           -           -           -           -           -           -           -           -           iv

Acknowledgement -           -           -           -           -           -           -           -           v

Table of contents   -           -           -           -           -           -           -           -           vi

Abstract        -           -           -           -           -           -           -           -           -           ix


  • Background of the Study -        -        -        -        -        -        1
  • Statement of the Problems - -        -        -        -        -        5
  • Objectives of the Study -        -        -        -        -        -        10
  • Method of Analysis -        -        -        -        -        -         10
  • Statement of Hypothesis -           -           -           -           -           -           11

1.6 Scope of Study                        -           -           -           -         -        -        11

1.7 Organization of the Study    -           -           -           -           -        -         12




2.1 Literature Review       -           -           -           -           -           -           -           13

2.2 Development of electronic banking          -           -           -           -        18

2.3 The Development of Electronic Banking in Nigeria-      -           -        23

2.4 Organizational Performance           -           -           -           -           -        26

2.5 Advantages of Electronic Banking  -          -           -           -         -        27

2.6 Disadvantages of Electronic Banking        -           -           -           -           29

2.7 The view on electronic banking -   -           -           -           -           -           30

2.8 The Card System     -          -          -          -          -            -         36

2.9 The Entry of Nigerian Banks into electronic banking    -           -           39

2.10 Threats of cyber-crimes on the Nigerian banking premises -           42

2.11 The regulatory challenges  -           -           -           -           -                     45


Research  methodology -        -        -        -        -        -        -         46

3.1 Theoretical framework      -        -        -        -        -        -        45

3.2 Sources of Data           -           -           -           -           -           -           -           48

3.3 Method of data analysis       -           -           -           -           -           -           49

3.4 Model Specification               -           -           -           -           -           -           49



Data Representation and Analysis         -           -           -           -           -           52

4.1     Data presentation   -           -           -           -           -           -           -           52

4.2     Data Analysis -           -           -           -           -           -           -           54

4.3     Interpretation of Results   -           -           -           -           -           -           55


Summary, Conclusion and Recommendations          -           -           -           65

5.1     Summary      -           -           -           -           -           -           -           -           65

5.2     Conclusion    -           -           -           -           -           -           -           -           66

5.3     Recommendations -           -           -           -           -           -           -           66

References   -           -           -           -           -           -           -           -           -           68

Appendix     -          -          -          -          -          -          -          -      76



This study examines the impact of E-Banking on financial sector in Nigeria from 2001 to 2016. Time series data were obtained from Central Bank of Nigeria statistical bulletin, and analyzed with Ordinary Least Squares (OLS) regression technique. The results obtained indicated that the Return on Asset (ROA) has a direct relationship with Credit Risk (CRR), Expense Management (EXPM), Liquidity (LIQ), and Size (SZE) while there is an inverse relationship between Return on Asset (ROA) and Bank Capitalization (CAP) and Inflation (INF).

After a thorough investigation, it was discovered that electronic banking has both negative and positive impact in the Nigerian financial system. While it has greatly improved service delivery on the positive angle but on the negative side, it is prone to electronic fraud and unauthorized access to information.



1.1 Background of the study

        With the proliferation of the internet, coupled with the world increasingly addicting to e-business, the trend of cash transactions is now giving way to electronic payment system. This growing acceptance of the digital lifestyle, as stated in Salehi and Alipour (2010), has brought a significant transformation in customers’ expectations from their financial service providers. According to Offei and Nuamah-Gyambrah (2016), customers are now seeking for a faster and convenient technology with more rewarding banking experience.

Perceived Usefulness (PU) and Perceived Ease of Use (PEOU) are two factors mentioned in Davis’s Technology Acceptance Model (TAM) that influences users’ decision to use a particular technology system (Surendran, 2012), users will eventually lose interest in e-banking if they feel that it is no longer useful even if the system is somewhat easy to handle (Obiri-Yeboah et al., 2013). Therefore banks that fail to respond to the emergence of e-banking in the market are likely to lose their customers (Salehi and Alipour, 2010); Lee (2009) stressed that its adoption seem not to be yielding the anticipated results, thereby creating a gap between the actual returns and its proposed objectives.

Besides the high cost of transactions and epileptic network connections associated with e-banking system in Nigeria, the introduction of e-banking into banking operations brought an increase both in the volume of deposits, as well as fraudulent practices (Agwu and Carter, 2014). Even with the aim of using it to decongest banking halls, these halls are most of the time still full with customers. If these situations are not dealt with accordingly, it could result into some negative consequences since the more active customers are with their electronic transactions the more profitable it is for the banks and a dis-satisfied customer leaves an organization with negative word of mouth publicities about the organization (Hoseiniand& Dangoliani, 2015).

In this light, this paper investigated the role which e-banking has played in the operational efficiency of banks in Nigeria. Specifically, can we say the traditional banking has been more profitable than E-Banking? A lot of research works have been done on the prospects and challenges of Information Technology in the banking industry, these research works are broad-based and only few are actually carried on electronic banking (e-banking).

Modern banks now realised that only those that overhaul their payment service delivery and operations are likely to survive and prosper in the 21st century (Opara, et al, 2010). This is due to the pressure of globalization, consolidation in the banking sector, privatisation, deregulation and rapidly changing technology, among others (Connel and Saleh 2004). In order to properly place themselves in favourable positions for competitions and be one of those corporations to be reckoned with in the new century, banks are making use of Internet to execute mobile banking, this developed from bringing PCs together to form local and Wide Area Networks through client/server technology.

Many banks have installed modern computer inter-connectivity backbone that would enable them achieve communications of data and multimedia over Internets, Intranets and Extranets. They also realise that they have to achieve not only management/staff wide computer literacy but what could be called information literacy i.e. knowing how to locate, analyse, store and use information. All staff and managers in a modern bank need to be able to search and gather data from several types of sources, analyse them, select relevant ones and organise them in such a manner to allow them make decisions base on the organised data.

Banks of the future have realised that the banking of tomorrow requires more of electronic manipulations and shuffling of bits-based money and other banking transactions, instead of paper. In other words, paper based transactions are now being replaced by electronic-based transactions e.g. the internet services. Whether a bank would be successful or not depends on the extent to which it is investing in IT and using it in an innovative manner. This area has been tipped to be a major competitive ground for banks that are operating in the post-consolidation era.


Electronic banking is a driving force that is changing the landscape of the banking industry fundamentally, in particular, towards a more competitive industry. Electronic banking has blurred the boundaries between different financial institutions, enabled new financial products and services, and made existing financial services available in different packages (Agbada, 2008). But the influences of electronic banking go far beyond this.

The developments in electronic banking, together with other financial innovations, are constantly bringing new challenges to finance theory and changing people’s understanding of the financial system. It is not surprising that in the application of electronic banking in Nigeria, the financial institutions have to face its problems. Communications over the Internet are insecure and often congested. The financial institutions would also have to contend with other Internet challenges including security, quality of service and some aberrations in electronic finance (Guardian Newspaper, 2001).

Besides, the existing business environment also poses some challenges to the smooth operations of electronic banking in Nigeria. Some of these operational challenges include epileptic power supply, dominance of cash transaction in the economy, low level of awareness among Nigerians, etc. (Agbada, 2008). The thrust of this research work was to examine the trend of electronic banking in Nigeria and a critically examination of the challenges noted above.

In Nigeria, customers of  banks today are no longer interested about safety of funds and increase returns on their investment only. Customers demand fast and efficient services. Customers want a bank that will offer them services that will meet their particular needs (personalized banking) and support their business goals for instance; business men want to travel without carrying cash for security reasons. They want to be able to check their balance online, find out if cheque is cleared, transfer funds among account and even want to download transaction records into their computer at work or home. Customers want a preferential treatment and full attention in their choice bank. All these are only achievable through electronic banking.

Despite the usefulness of electronic banking there are inhibiting factors so therefore, how effective and efficient electronic banking is, despite its attendant problem to be addressed.

Banks since the inception of the use of Internet banking products in the late 1980's have not made their presence felt much. These are as a result of problems associated with the use of Internet banking include the following:

Nigerian's poor Infrastructures:  The first major challenge for the future of Internet banking is Nigerian’s poor infrastructure. Word Bank data indicates that in Nigeria there are only 6 computers and 4 mainline telephone lines per thousand people. Electricity supply is sporadic and inefficient. Most importantly, Nigeria has very low Internet penetration, with less than one Internet services provided per thousand people and only an estimated 30,000 Internet users out of over 100 million. In addition, Internet bandwidth is negligible when compared with more developed nation as they has been insufficient deregulation of the telecommunications sector to allow for investor to provide bandwidth and sell commercially. Finally, many of the area crucial to the financial sector such as the cleaning and trade processes are not automated which will limit the efficiency of internet banking in this country.

Lack of security: The second challenge for the future of Internet banking in Nigeria is the issue of security. Resent research carried out in Africa shows that companies consider the biggest obstacle to being used the Internet for financial transaction to the lack security. Many companies are concerned about the integrity of financial information that travels over the internet and would rather accept the inefficiencies and incontinences of a manual system that subject themselves to the uncertainty of the internet, in addition Nigeria is a cash economy and the issue of trust in such that even cheques are not generally accepted as payment for goods and services rendered. Recently, the Nigerian market has witnessed the development of electronic purse products such as value card and the smart pay card, designed to move the economy although it is hoped that they will eventually help lessen the importance of cash in our society. It is therefore clear that in such an environment, most consumers will be skeptical that a click on a computer screen will result in a completed financial transaction.

Cost of ownership and Adoption: Internet banking’ very expensive because it entails the acquisition of computers, telecommunication gadgets, Banks spend a lot on these products because of the exchange rate between the Naira and the dollar.

Poor orientation (illiteracy): So many people are still ignorant of the services and benefits available to them through the use of Internet banking product. The benefits include that it is fast, safe and reliable.


1.3    Objectives of the Study

the main objective of the study is to examine relationship between e-banking activities (proxied by value of Return of Asset ROA) and the performance of  the financial sector in Nigeria.

Specifically, the study strives to achieve the following objectives:

1) To determine the relationship between Return on Asset (ROA) and bank performance in Nigeria.

2) To examine the impact of Electronic Banking on the financial sector in Nigeria.

1.4    Method of Analysis

Secondary annual-time series data was used for the empirical analysis. Two model were formulated in which Return on Asset (ROA) is employed as the explained variable while Credit Risk, Expense Management, Liquidity, Capitalization, Capital, Size, and Inflation Rate are adopted as the explanatory variable.

The ordinary least square technique (OLS) via the simple regression analysis is used to estimate the numerical values of the parameter estimates. The OLS technique was picked due to the optimal properties it possesses such as linearity, unbiasedness, efficiency, consistency and sufficiency. Furthermore, the OLS technique was used because it is computational procedure is quite easy and is widely used in estimating coefficients of economic relationship in economic researches.

1.5    Statement of Hypothesis

  1. H0: There is an impact of electronic banking on financial sector in Nigeria

H1: There is no impact of electronic banking on financial sector in Nigeria

1.6    Scope of Study

This study was designed to ascertain the impact of E-Banking on the financial sector of Nigeria using a 16 year time series ranging from 2001-2016, where data and information were gathered from textbooks, news bulletins, statistical journals, The Central Bank Statistical Bulletin and also the internet.


1.7     Organization of the Study

This research work consist of five chapters, Chapter One give the background of the study, Statement of the Problem, Objectives of the Study, Method of Data Analysis, Statement of Hypothesis, Scope of Study and Organization of the study.

Chapter Two gives us the Literature Review, Development of electronic banking, it’s development in Nigeria, the organizational performance, the view on electronic banking, advantages and disadvantages of electronic banking also the regulatory challenges.

Chapter Three deals on the Methodology, Sources of data and Model Specification,

Chapter Four deals with Presentation of results, analysis of result and interpretation of results. While chapter Five deals with conclusion, summary, recommendations and refrences.

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