Hustle for Cash: Evidence from Nigeria's Naira Crunch

When Nigeria's central bank abruptly withdrew currency in late 2022 and capped cash withdrawals, the resulting shortage, the naira crunch, created a sharp, unanticipated cash supply shock. This paper exploits cross-state variation in pre-shock digital payment adoption, measured eleven days before the policy announcement, to estimate the real costs of the crunch and the insulating role of financial infrastructure. Using enterprise modules from the Nigeria Living Standards Phone Survey (1,842 household enterprises across three rounds), with the parallel-trends assumption validated through a 45month pre-shock nighttime-light panel covering all 774 Nigerian local government areas, enterprises in states one standard deviation above the pre-shock fintech mean were 1.7 percentage points more likely to remain in operation at peak crunch and 7.7 percentage points more likely to survive fourteen months later. Employment effects are also large: 0.29 additional enterprise workers per standard deviation of fintech at peak crunch. Effects are concentrated in rural and small enterprises. The results identify digital financial infrastructure as a macroeconomic stabiliser against cash supply disruptions, with implications for central bank currency operations in low-income economies.