IMPACT OF CRYPTO CURRENCY ON THE OPERATIONS OF DEPOSIT MONEY BANKS (DMB) IN NIGERIA

Abstract

The Digital currency in Nigeria has experienced turbulent times following the acquisition of deposit money banks (DMBs) in Nigeria since 2007 till date. In order to minimize their operational costs, commercial banks have adopted digital banking including bit-coin, crypto-currency and other internet banking and internet banking system where customer can access their accounts on their personal computers. Mobile applications as it offers millions of people a potential solution in emerging markets in Nigeria, yet remain excluded from the financial mainstream. It can make basic financial services more accessible by minimizing time and distance to the nearest retail bank branches as well as reducing the bank‘s own overheads and transaction- related costs. The objective of this study was to determine The Impact of Crypto Currency on the activities of Deposit Money Banks (DMB) in Nigeria. The study applied descriptive research design. The target population included all the 14 deposit money banks (DMB) in Nigeria who provide digital banking system to all the commercial banks operating in Nigeria as at December 2021. The total transactions made during the period of study were collected and the number of bit-coin users was regressed against bank performance as measured by the return on assets. The study used secondary data from the Central bank of Nigeria and Nigeria National Bureau of Statistics. During the study period, the amount of money transacted through the digital banking system increased steadily from 0.06 billion in 2012 on its launch to 118.08 billion by the last month of the analysis. The growth was motivated by the convenience offered by the service. The study however found that there exist a weak positive relationship between digital banking and the financial performance of commercial banks in Nigeria. The study recommends that the policy makers take digital banking awareness creation into consideration when drafting policies on the operations of banks in Nigeria. This was because of the indirect relationship of digital banking and financial performance especially as the industry moves into a technologically competitive environment. The study also recommends that policy makers keep a keen eye on the developments of digital banking as it is a new platform for competition among commercial banks as the world moves into a digital age to ensure it does not lose its regulatory role.