| Journal of Economics and Management Volume 19, No. 2 September, 2023 |
| Effect of Financial Innovative Payment Systems on Commercial Banks' Returns on Assets and Equity in Nigeria: An Application of Multi-Criteria Decision Making Methods |
| Tomola M. Obamuyi |
| Federal University of Technology, Akure, Nigeria |
| Babatunde O. Oke |
| University of Lagos, Lagos, Nigeria |
| Abass A. Shiro |
| University of Lagos, Lagos, Nigeria |
| Adebisi T. Adebusuyi |
| Kingston University, London, United Kingdom |
| Abstract |
| Innovation has been a key element of the Nigerian financial system based on the report of the Central Bank of Nigeria Technical Committee on E-Banking in 2003 which provided a platform for addressing its impact on the economy. This paper examined the effects of financial innovation on commercial banks’ returns on assets and equity in Nigeria when different periods of analysis were considered. Data were obtained from the publications of the Central Bank of Nigeria on e-payment channels from 2009 to 2018. A decision making approach based on Multi-Criteria Decision Making (entropy and range of value) methods was employed for the determination of the innovative payment systems that enhance the performance of the banks. The entropy method determines the weights of banks' returns on assets and equity, whereas the range of value method ranks the innovative payment systems. Vector Autoregression (VAR) estimation technique was utilised to compute the decision matrix for the medium and long terms. Findings indicated that return on assets, with higher entropy weights (0.5733 in the medium years and 0.6058 in the long years respectively, as against weights of 0.4267 and 0.3942 for return on equity in the medium and long run respectively), was a better criterion for assessing commercial banks’ returns on assets and equity. The paper concluded that commercial banks would enhance their medium and long terms’ performance by employing the Multi-Criteria Decision Making (entropy and range of value) methods to make the best decisions on the relative importance of their financial innovative payment systems. |
| Keywords：Payment Systems, Returns on Assets and Equity, Multi-Criteria Decision Making, Automatic Teller Machines, Mobile Money Banking |
| JEL Classifications：G21, G28 |
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