Digital Payment Infrastructure and Nigerian Cross-Border Banking Liquidity Resilience Across West Africa: Evidence from Nigeria

Vollständiger Abstract

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Nigeria’s digital economy has expanded rapidly, underpinned by growth in digital payments. This study investigates the influences of digital payment infrastructure growth on the liquidity reliability of cross-border banking systems within the West Africa region. Existing literature predominantly examines the effects of digital payment on liquidity in Nigerian banks; however, there is a paucity of knowledge regarding the influence of digital payment channels on liquidity resilience within multinational banks operating in varying regulatory environments in the West African region. This study takes advantage of monthly time-series data from 2011 to 2021 and employs an Autoregressive Distributed Lag (ARDL) framework to assess the short-run and long-run dynamics of digital payment infrastructure and the liquidity behavior of Nigerian cross-border banks. The results indicate that digital channels have different effects. In the long run, modern digital payment channels, especially electronic fund transfers, make liquidity more stable. Traditional channels, on the other hand, have weaker or short-term effects. The findings have significant implications for policymakers and regional regulatory harmonization within West African economics.