Digital Financial Services and Economic Growth in Nigeria

Abstract

Nigeria’s economic trajectory has increasingly been shaped by the expansion of Digital Financial Services (DFS), driven by innovations, and digital banking. DFS is a catalyst for inclusive finance and macroeconomic performance, yet Nigeria’s outcomes remain mixed. This study examines the impact of DFS on economic growth, measured through GDP per capita, and explores how digital financial indicators contribute to short- and long-run growth dynamics. Anchored in Human Development Theory and the Unified Theory of Acceptance and Use of Technology (UTAUT), the study employed an ex post facto design using secondary data from 2010–2024, sourced from the World Development Indicators and related databases. Analytical methods included descriptive statistics, Autoregressive Distributed Lag (ARDL) bounds testing, and Error Correction Models (ECM) to capture the effects of DFS on GDP per capita. Robustness was ensured through pre-estimation and post-diagnostic tests. Findings revealed that DFS significantly influence GDP per capita (Adj. R² = 0.824, F(5,9) = 12.299, p ˂ 0.05), with account ownership and internet penetration emerging as critical drivers. Both indicators exerted positive short-run effects and sustained long-run impacts, underscoring the transformative role of digital connectivity and financial access in Nigeria. The study concludes that DFS are pivotal to Nigeria’s economic growth, though their effects vary across time horizons. Policy recommendations include scaling up equitable financial literacy programs, expanding internet infrastructure, reducing interest spreads, and strengthening regulatory effectiveness. A focused policy framework integrating DFS into Nigeria’s growth agenda is essential to maximize their potential as drivers of sustained GDP per capita growth.