Internet Banking and Domestic Investment Nexus: The Nigeria Experience

Emergence of internet banking in the world has affected both domestic and foreign investment across countries. However, the level at which countries absorbs the internet banking for investment purposes vary across countries. This study examines the internet banking and domestic investment nexus in Nigeria. In order to achieve this, two objectives were utilized: to examine the nature of the relationship between internet banking and domestic investment and to determine the extent of the effect of internet banking on domestic investment in Nigeria. The study used quarterly data from the period of 2012 to 2022. The stationarity of the data was tested using Augmented Dickey and Fuller Unit root test and the co-integration was done using bound test approach. The data were analysed using an autoregressive distributed lag model. The findings show that ATM has positive and significant effect on domestic investment in the long run but in the short run, it exerts negative and significant effect; interest rate has insignificant effect on domestic investment in the short run while in the long run it has negative and significant effect; Mobile Money (MM) has negative effect on domestic investment in the short run while in the long run it has a positive effect on domestic investment; NEFT has positive and significant effect on domestic investment in the short run while in the long run, it does not exert significant effect on domestic investment and; POS has positive and significant effect on domestic investment in the short run whereas in the long run, it has negative and significant effect on domestic investment. The study therefore recommends that internet banking should be encouraged and that internet banking security should be strengthened to increase the confidence of investors.