Internet Banking and Bank Stability: Assessing the Effects on Liquidity and Asset Quality in Nigerian Commercial Banks

Abstract This study investigated how internet banking correlates with bank stability, with particular emphasis on liquidity and asset quality, using evidence from Nigerian commercial banks. The analysis draws on panel data from the published accounts of eight internationally licensed banks over the period 2015 to 2022. Employing an ex-post facto research design, both descriptive and inferential statistical techniques were utilized to examine the hypothesized relationships. Findings indicate that internet banking exerts a statistically significant positive effect on bank liquidity, suggesting that digital banking channels may enhance short-term funding flexibility and operational efficiency. Notwithstanding, internet banking could not exert significant influence on asset quality, indicating that credit risk exposures remain largely unaffected by the expansion of digital banking services. Furthermore, liquidity did not significantly moderate the relationship between internet banking and asset quality. These results suggest a level of institutional resilience and adherence to global credit risk management practices, despite the growing digitization of banking operations. The study recommends amongst others that commercial banks maintain strict compliance with credit management guidelines to safeguard asset quality in the face of expanding internet banking services.