Emmanuel Onyebuchi Onah, Angela Ifeanyi Ujunwa, Augustine Ujunwa and Oloruntoba Samuel Ogundele
This paper aims to examine the effect of financial technology on cash holding in Nigeria.
Abstract
Purpose
This paper aims to examine the effect of financial technology on cash holding in Nigeria.
Design/methodology/approach
The authors use Pesaran et al.’s (2001) autoregressive distributed lag (ARDL) bounds test approach to cointegration to estimate the long-run relationship between four direct measures of financial technology (automated teller machine [ATM], Internet banking [IB], point of sale [POS] and mobile banking [MB]) and cash holding.
Findings
The authors find the presence of long-run negative relationship between cash holding and the four direct measures of financial technology.
Practical implications
Despite the negative effect of financial technology on cash holding, the descriptive results highlight increasing trajectory in cash holding. This suggests that structural factors such as ethical climate, literacy level, household characteristics, currency denomination structures, economic uncertainty and infrastructure deficit may account for the pervasive cash transactions in Nigeria and not necessarily the unwillingness of economic agents to use digital platform for financial transactions.
Originality/value
This study contributes to existing literature by augmenting the money demand function to accommodate direct measures of financial technology in examining the effectiveness of the policy on cash holding in Nigeria.