Impact Of Internet Banking On Profitability Of Commercial Banks In Nigeria

This study is aimed at ascertaining the impact of internet banking services expenditure on the profitability of commercial banks in Nigeria; with the focus on Zenith Bank Plc. Internet technology holds the potential to fundamentally change banks and the banking industry. Its objective is to examine the relationship between mobile banking service expenditure and the profitability of Zenith bank plc. It helps to know whether or not there is a significant relationship between mobile banking service expenditure and the profitability of commercial banks. Information for this study is gathered from the annual reports of the Zenith Banks from the year 2005-2017.The design for the study is ex-post-factor research design. A regression analysis was prepared and data obtained. The result reveals that there exists a positive and significant relationship between the log of internet banking services expenses and the return on assets. Based on the following findings of this study, the following policy recommendations are suggested: The empirical results of the study have revealed significant relationship between the log of internet banking services expenses (IBSE) and return on asset (ROA). We therefore, advocate for more ATM facilities which should be placed at strategic location for easy access.

The main objective of this study is to examine the impact of internet banking on profitability of commercial banks in Nigeria, using Zenith bank PLC as a case study. Other objectives are:

1. To examine the relationship between mobile banking service expenditure and the profitability of Zenith bank PLC.
2. To examine the relationship between Automated Teller Machine service expenditure installed and the profitability of Zenith Bank PLC.
3. To examine the relationship between credit or debit card issued to customers service expenditure and the profitability of Zenith Bank PLC

H_o: There is no significant relationship between mobile banking service expenditure and the profitability of commercial banks.

H₁:There is a significant relationship between mobile banking service expenditure and the profitability of commercial banks.

H_o: There is no significant relationship between Automated Teller Machine service expenditure and the profitability of commercial banks

H₁: There is a relationship between Automated Teller Machine service expenditure and the profitability of commercial banks.

H_o: There is no significant relationship between credit or debit bank issue service expenditure and the profitability of commercial banks.

H1: There is a significant relationship between credit or debit bank issue service expenditure and the profitability of commercial banks.

In the light of the objectives of the research, the following research questions were considered pertinent:

1. What is the relationship that exists between mobile banking service expenditure and the profitability of Zenith Bank PLC?
2. What is the relationship that exists between Automated Teller Machine service expenditure and the profitability of Zenith Bank PLC?
3. What is the relationship that exists between credit or debit cards to consumers service expenditure and the profitability of Zenith Bank PLC?

2.1 Introduction

This chapter helps in providing the background of the context of the research problems. It reviews the existing literature on the effect of internet banking on profitability of commercial banks. We are going to review the following on this chapter: the conceptual framework, theoretical framework, empirical review and the summary of literature review.

2.2 Conceptual framework.

Internet banking is the use of internet in order to provide services like on line transfer, payment of bills and any other on line banking activity. Internet banking can be grouped into four major classes....

5.1​Summary

In this study, we set out to empirically evaluate the impact of internet banking on the profitability of Commercial Bank of Zenith Bank Plc. In Nigeria. The study was conducted to ascertain how internet banking affects Zenith Bank Plc in Nigeria.

Secondary data were used; the source of data included Zenith Bank Plc. annual financial statement (2017). In order to achieve the objectives of the study, three econometric models were formulated using the Ordinary Least Square (OLS). In the first model, return on assets was regressed on internet banking service expenses. In the second model, return on equity was regressed on internet banking service expenses and in the third model, net income margin was regressed on internet banking service expenses.

The major findings of the study are summarized below:

1. The result has established a positive and significant relationship between the log of internet banking services expenses (IBSE) and return on asset (ROA). This has been found to be consistent with the theory.
2. The result also revealed a positive and significant relationship between log of internet banking services expenses (IBSE) and return on equity (ROE). This has been found to be consistent with the theory.
3. Lastly, the result also revealed a positive and significant relationship between log of internet banking services expenses (IBSE) and net income margin (NMG). This has been found to be consistent with the theory.

5.2 Policy Recommendations

Based on the following findings of this study, the following policy recommendations are suggested:

1. The empirical results of the study have revealed significant relationship between the log of internet banking services expenses (IBSE) and return on asset (ROA).We therefore, advocate for more ATM facilities which should be placed at strategic location for easy access...

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