Effect of Cashless Policy on Bank Efficiency in Ondo North Senatorial District, Ondo State, Nigeria

Abstract

The cashless policy has brought confusion among the masses as many misconceived the term to be a policy where there is no more cash in circulation but only credit and debit card and other instruments are used as a mean of transaction. Many still believed that, the cash limit set by Central Bank of Nigeria (CBN) in respect of cashless policy is too low and query how the CBN arrived at the bench-mark. The study was a descriptive survey. Data were collected with a structured questionnaire. The participants were 354 employees selected from 7 commercial banks in the Ondo North Senatorial District of Ondo State. This study employed Probit Model Analysis.

The findings revealed that bank cashless policy had a significant effect, with 84.5% increase of the variations in return on assets. The findings also revealed that automated teller machines (ATM), debit and credit cards, point of sales (POS) and mobile banking had a higher moderating effect than electronic funds transfer and internet services on cashless policy of commercial banks in study area. Based on the findings of the study, it can be concluded that cashless policy affects efficiency of commercial banks in the study area. It is therefore recommended to the management of commercial banks to explore and implement sustainable business linkages and collaborations with automated teller machines, debit and credit cards, point of sales and mobile banking service providers as well as the electronic funds transfer and internet service providers as a way of accelerating the penetration of cashless policy and eventually creating desired impacts in the economy.