This study examined the relationship between digital credit and allocative efficiency in Nigeria using three key variables: credit to the private sector, total e-payment value, and the number of internet subscribers. The central question guiding the study was whether increased activity within Nigeria’s rapidly expanding digital financial sector has been associated with deeper credit intermediation to the productive private sector. While the broader literature treated digital credit in relation to financial inclusion, algorithmic scoring, consumer protection, and productivity, this study deliberately narrows its empirical focus to a simple and measurable macro-financial relationship that can be tested using official secondary data. The study adopted a quantitative time-series research design based on annual Nigerian data for the period 2018–2024 obtained primarily from the Central Bank of Nigeria (CBN) Statistical Bulletin and related CBN financial sector tables. Telecom connectivity data was sourced from the National Bureau of Statistics (NBS). Credit to the private sector was used as the dependent variable because it reflects the extent to which financial resources flow to the productive private economy. Total e-payment value proxied the scale and penetration of financial digitalisation, while internet subscribers proxied the spread of the digital infrastructure required for platform- based and app-enabled finance. The analytical methods used for the research were descriptive statistics, trend analysis, correlation analysis, and ordinary least squares regression. Logarithmic analysis and growth rate assessments were then applied to strengthen the results. The study proposes that digital finance can be beneficial for allocative efficiency, depending on how much it reduces transaction costs, overcomes the issue of information asymmetry, and opens up new ways of delivering formal financing services to entities that would have been left out otherwise. At the same time, the body of work highlights that digitalization alone will not guarantee productive financing if poor infrastructural setup, lack of trust, poor digital literacy, and poor design of digital financial products make it difficult to take advantage of the digital tools available (Aggarwal, 2021; Sam-Abugu et al., 2025). Through focusing only on three specific variables, the study provides an empirical approach to determine whether digitalization and improved internet usage are linked to credit performance in the Nigerian private sector.
Keywords: Allocative Efficiency, Credit to Private Sector, digital credit, internet subscribers, total e-payment value
