Examining the effect of financial innovation on the profitability of Nigerian banks: Evidence from bank size dynamics (2009–2024)

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ID: 309388
2025
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Abstract
This study investigates the impact of financial innovation on the profitability of commercial banks in Nigeria, with a particular focus on the moderating role of bank size. Using panel data from 15 listed deposit money banks between 2009 and 2024, the study examines how various innovation channels including mobile banking, electronic payments, internet banking, and agent banking affect bank performance, measured by Return on Assets (ROA). Drawing on Financial Intermediation Theory, the Technology Acceptance Model, and the Resource-Based Theory, the research employs a fixed effects panel regression model with interaction terms to explore the dynamics between financial innovation and profitability. The results reveal that mobile and agent banking significantly enhance profitability, especially in larger banks, while internet and electronic banking show weaker or statistically insignificant effects. The findings further confirm that bank size positively moderates the relationship between innovation and profitability, reinforcing the strategic advantage of scale. Policy implications highlight the need for regulatory support to scale digital adoption across all bank sizes, particularly for smaller institutions with limited capacity. The study contributes to the financial innovation literature by providing context-specific evidence from Nigeria and offering practical insights for bank management and policymakers.
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Authors Anthony Kolade Adesugba
Journal Aminu Kano Academic Scholars Association Multidisciplinary Journal
Year 2025
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