Determinant of E-Money Usage in the Nigeria Financial System

This study investigates factors influencing electronic money usage in Nigeria, aiming to identify determinants of its adoption. Using time series data from the Central Bank of Nigeria (CBN) statistical bulletin (2012–2021), electronic money transaction values were set as the dependent variable, while financial sector development, banking sector development, financial access, financial literacy, and perceived risk served as independent variables. Multiple regression analysis with econometrics software was employed for data analysis, utilizing R², Durbin-Watson statistics, T-statistics, F-statistics, and β coefficients to measure the effect of independent variables on the dependent variable. The findings reveal that 48% of the variation in electronic money usage is attributable to the chosen independent variables, while 52% is due to factors outside the model. Specifically, financial literacy, banking sector development, and financial access positively impact electronic money usage, whereas financial sector development negatively impacts it. Perceived risk also showed a positive effect. Consequently, the study concludes that financial sector development negatively and significantly relates to electronic money usage, while banking sector development, financial literacy, financial access, and perceived risk are positively and significantly related to electronic money usage. Based on these findings, the study recommends that commercial banks and electronic money providers prioritize system updates to enhance user accessibility, emphasizing ease of use for all users. These measures could improve electronic money adoption and increase user confidence across Nigeria.