Effect of Cashless Policy on Gross Domestic Products in Nigeria: A Vector Autoregressive Model (VAR) Approach

Abstract

The study undertakes an econometric research to analyze the cashless policy and its effectiveness on Gross Domestic Products in Nigeria using quarterly data of 2019 to 2022. The vector Autoregressive model (VAR) was adopted to examine how automated teller machine (ATM), Point of sale (POS) and Internet banking (IB) had impacted on Nigeria GDP. Unit root test was carried out on each of the variables to determine their level of stationarity. They were however found stationary after first difference with the p- values less than 0.05 and then used for the regression analysis. And a Johanso test of cointigration was used to examine the short or long term influence of the cashless policies on GDP. In the VAR model result, the activities on automated teller machine (ATM) and point of sales (POS) has significant influence on Nigeria economic growth with their respective p-values less than 0.05 and R-Squares = 0.99. The result from the Johanson test of cointigration show that there is on cointigrating factor which infers a short-term influence. The study recommends that the use of ATM and POS should be much more encouraged in Nigeria, with proper awareness on its benefit. Also effective policy needs to be developed by the government through the CBN to ensure the effectiveness and efficiency of ATM and POS.