IMPACT OF FINANCIAL INCLUSION ON PROFITABILITY AND EFFICIENCY OF DEPOSIT MONEY BANKS IN NIGERIA
Hamisu Ali , Ibrahim Hamisu , Scholastica John Itodo , Mohammed A. M Usman , Nuru Abdullahi , Teri John , Hyellafiya Caleb , Hope Elijah Tumba , and Dishi-Khobe Pwaveno Glory
Volume 6 Issue 1
Abstract
This study examined the impact of financial inclusion on the profitability and efficiency of Deposit Money Banks (DMBs) in Nigeria using Automated Teller Machine (ATM), Point of Sale (POS), Mobile Banking Transactions (MOBT), and Internet Banking (INTB) as proxies for financial inclusion, while Return on Assets (ROA) was used to measure profitability and efficiency. The study adopted an ex-post facto research design and utilized secondary data obtained from the Central Bank of Nigeria Statistical Bulletin, annual reports of selected banks, Nigeria Inter-Bank Settlement System, National Bureau of Statistics, and the World Bank Global Findex Database. Panel data techniques such as descriptive statistics, panel unit root tests, Ordinary Least Squares (OLS), Fixed Effect Model (FEM), Random Effect Model (REM), Hausman test, and diagnostic tests were employed. The findings revealed that ATM, POS, MOBT, and INTB exert positive and statistically significant effects on ROA, indicating that financial inclusion improves the profitability and operational efficiency of Deposit Money Banks in Nigeria. The Hausman test confirmed that the Fixed Effect Model was the most appropriate model for the study, while diagnostic tests showed the absence of heteroskedasticity and serial correlation, confirming the reliability of the model. The study concluded that financial inclusion significantly enhances banking sector performance through increased digital banking adoption, transaction efficiency, and improved service delivery. The study recommends that the Central Bank of Nigeria should strengthen policies that promote digital banking services, while the Federal Ministry of Communications, Innovation, and Digital Economy should improve digital infrastructure and internet connectivity to support financial inclusion in Nigeria.
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