Effect of Digital Financial Innovation on Entrepreneurial Growth in the Nigerian Banking Industry (Published)
Using primary survey data collected from 576 small and medium-scale enterprise (SME) operators across Nigeria’s six geopolitical zones, the study quantitatively assesses the role that mobile banking usage, digital payment systems, agency banking and digital lending technologies play in driving entrepreneurial performance. Subjective growth includes measuring entrepreneurial success via revenues and new customers. The research design used is descriptive–explanatory and uses various SPSS equivalent statistical techniques: reliability analysis, descriptive statistics, Pearson correlation analysis and multiple regression models. The findings indicate that digital financial innovation drives entrepreneurial growth significantly in Nigeria. The usage of mobile banking, as well as digital payment will stand out as the strongest and most unique enablers of both revenue growth and customer growth. Similarly, agency banking usage has a positive and statistically significant effect on customer base expansion reinforcing the need for last mile point of access particularly in low income and underserved areas. We find that digital lending technologies have positive but relatively small effects, we argue this is because they support working capital management rather than directly leading to growth acceleration. Secondary data from the Central Bank of Nigeria (CBN), Nigeria Inter-Bank Settlement System (NIBSS) and SMEDAN served to corroborate the findings of this study with substantial evidence from CBN to attest growth in electronic payments and superior performance of digital SMEs. The findings confirm the Technology Acceptance Model and Schumpeter’s Innovation Theory are critical to the adoption of digital financial technology by entrepreneurs. It is also suggested that infrastructural quality, regulatory coherence and digital literacy moderate the growth impacts of digital finance. Digital finance innovation is an important driver of entrepreneurial growth in Nigeria according to the study which recommended specific infrastructure and regulatory investments as well as the development of SMEs focused digital capabilities.
Keywords: Digital financial innovation, Nigerian SMEs., agency banking, digital lending, digital payment systems, entrepreneurial growth, mobile banking