Dynamic effect of financial technology on financial development in Nigeria

Type of the article: Research Article AbstractFinancial technology has become a top priority and a vital avenue for banking institutions seeking financial development and enhanced services. Financial technology is using a new digital transformation in the financial services industry. The study aims to investigate the dynamic effect of financial technology tools on financial development, examining both the long-run and short-run perspectives. The study used an ex-post facto research design because the data already existed and were retrieved from the Central Bank of Nigeria’s statistical bulletin. The Autoregressive Distributed Lag (ARDL) model was employed to examine the impact of financial technology policy tools and financial development from the first quarter to the fourth quarter of 2013–2023. The long-run results revealed that financial technology positively impacted financial development, where a 1% increase in financial technology led to a 20.33% (p-value = 0.4123) increase in financial development, though statistically insignificant. In the short run, financial technology positively impacted financial development, where a 1% increase in financial technology led to a 6.57% (p-value = 0.0053) increase in financial development. The results showed a statistically significant relationship between biometric authentication devices, point of sale, web-based transactions, and mobile banking on money supply to gross domestic product in the short run, suggesting that financial technology drives financial development, enhancing access to financial services, and improving efficiency. Banks should continuously strengthen the adoption of financial technology tools that would promote banks’ efficiency.