Monetary Policy Implications of Electronic Money Adoption: Evidence from Nigeria

Monetary Policy Implications of Electronic Money Adoption: Evidence from Nigeria | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Monetary Policy Implications of Electronic Money Adoption: Evidence from Nigeria Ikechukwu Kelikume, Adewumi Otonne This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-4139709/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This study investigates the monetary policy implications of electronic money adoption in Nigeria; that is, whether the electronic money adoption that began since the introduction of the cashless policy in Nigeria has disrupted the long-run stability of demand for money function. The findings reveal substantial growth in the Nigerian financial sector concerning the development and usage of electronic money, encompassing the expansion of banks and bank branches, Automated Teller Machines, mobile payments, Point-of-sale systems, web payments, and transaction volumes and values. Results from the study obtained through the Autoregressive Distributed Lag model (ARDL) show a substantial likelihood of an unstable and unpredictable demand function over time, potentially undermining the long-term effectiveness of monetary policy. The study underscores that electronic money transactions exert linear and non-linear effects on money demand and the velocity of money in circulation exhibits some form of instability during the study period. Consequently, the monetary authority should remain vigilant in monitoring evolving payment patterns and trends to discern the shifting dynamics of cash demand. A grasp of emerging payment technologies and transaction patterns will empower policymakers to proactively adjust monetary policies and regulatory frameworks, aligning them with the requirements of a digital economy. This approach ensures a balanced interplay with the demand for cash, which is essential for transactional activities within the economy. JEL: G21, E41, E52, C22, N17 electronic money money demand stability monetary policy financial technology ARDL Nigerias Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-4139709","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":283923972,"identity":"07331b8b-573f-4abf-a8d6-0fdc51d5f757","order_by":0,"name":"Ikechukwu Kelikume","email":"","orcid":"","institution":"Lagos Business School, Pan Atlantic University","correspondingAuthor":false,"prefix":"","firstName":"Ikechukwu","middleName":"","lastName":"Kelikume","suffix":""},{"id":283923973,"identity":"7751243f-1fb2-4983-97f3-47c48677e4cf","order_by":1,"name":"Adewumi Otonne","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAAuUlEQVRIiWNgGAWjYPCCGjkQeeABUYrZwOQxY7CWBBK0MCc2gCiitPDLNx97XFDBlj4/7PBDoC12croNBLRItrGlG884I5O78XaaAVBLsrHZAQJaDI7xmEnztrHlbpydANJyIHEbcVr+Macbzk7/QIqWBuYEeekcIm2RbEtLk+Y5dsxwg3ROwYEEAyL8ws98+Jg0T02NvPzs9M0fPlTYyRHUgnAhWKUBscpBQL6BFNWjYBSMglEwogAAyDo/VTBuyH0AAAAASUVORK5CYII=","orcid":"","institution":"Lagos Business School, Pan Atlantic University","correspondingAuthor":true,"prefix":"","firstName":"Adewumi","middleName":"","lastName":"Otonne","suffix":""}],"badges":[],"createdAt":"2024-03-20 22:44:13","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-4139709/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-4139709/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":53996958,"identity":"4d3956bf-60b7-4f74-979d-574175a11259","added_by":"auto","created_at":"2024-04-03 07:27:05","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":486284,"visible":true,"origin":"","legend":"","description":"","filename":"ManuscriptSubmissionSJES.pdf","url":"https://assets-eu.researchsquare.com/files/rs-4139709/v1_covered_3c6bde85-943e-4e07-8d8f-a5cf87a8b124.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"Monetary Policy Implications of Electronic Money Adoption: Evidence from Nigeria","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"electronic money, money demand, stability, monetary policy, financial technology, ARDL, Nigerias","lastPublishedDoi":"10.21203/rs.3.rs-4139709/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-4139709/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis study investigates the monetary policy implications of electronic money adoption in Nigeria; that is, whether the electronic money adoption that began since the introduction of the cashless policy in Nigeria has disrupted the long-run stability of demand for money function. The findings reveal substantial growth in the Nigerian financial sector concerning the development and usage of electronic money, encompassing the expansion of banks and bank branches, Automated Teller Machines, mobile payments, Point-of-sale systems, web payments, and transaction volumes and values. Results from the study obtained through the Autoregressive Distributed Lag model (ARDL) show a substantial likelihood of an unstable and unpredictable demand function over time, potentially undermining the long-term effectiveness of monetary policy. The study underscores that electronic money transactions exert linear and non-linear effects on money demand and the velocity of money in circulation exhibits some form of instability during the study period. Consequently, the monetary authority should remain vigilant in monitoring evolving payment patterns and trends to discern the shifting dynamics of cash demand. A grasp of emerging payment technologies and transaction patterns will empower policymakers to proactively adjust monetary policies and regulatory frameworks, aligning them with the requirements of a digital economy. This approach ensures a balanced interplay with the demand for cash, which is essential for transactional activities within the economy.\u003c/p\u003e\n\u003cp\u003eJEL: G21, E41, E52, C22, N17\u003c/p\u003e","manuscriptTitle":"Monetary Policy Implications of Electronic Money Adoption: Evidence from Nigeria","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2024-03-28 19:55:10","doi":"10.21203/rs.3.rs-4139709/v1","editorialEvents":[{"type":"communityComments","content":0}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true}}],"origin":"","ownerIdentity":"3db6a6b7-1ce6-4ba4-91b6-97fd8b21cb92","owner":[],"postedDate":"March 28th, 2024","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"posted","subjectAreas":[],"tags":[],"updatedAt":"2024-04-03T07:18:57+00:00","versionOfRecord":[],"versionCreatedAt":"2024-03-28 19:55:10","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-4139709","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-4139709","identity":"rs-4139709","version":["v1"]},"buildId":"8U1c8b4HqxoKbykW_rLl7","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}