IMPACT OF DIGITAL FINANCE ON CAPITAL MARKET PERFORMANCE IN NIGERIA

Abstract

This study examined impact of digital finance on the capital market performance in Nigeria for the period 2009Q1-2024Q4. Based on ex-post facto research design, annual secondary data on the indicators of interest were obtained from the central bank statistical bulletin. This study proxy’s capital market performance with market capitalization while digital financial was measured with Automated Teller Machines, point of sales web-pay. The quarterly data was analysed using data analyses descriptive statistics, correlation analysis and unit roots test by employing the Augmented Dickey-Fuller. Finally, the Toda-Yamamoto Granger causality techniques were conducted. Empirically, the results suggest a significant and growing interaction between digital financial services and capital market activities in Nigeria. However, the study concluded the strong correlation between digital finance tools (such as POS, mobile payments, and web payments) and capital market performance. Based on the research findings, the following recommendations are made for improved performance. It is recommended that the Nigerian government and financial regulatory agencies invest in expanding digital infrastructure. Enhanced broadband penetration, cybersecurity, and reliable electricity supply will further boost investor confidence and enable broader participation in capital markets via digital platforms. In addition, to fully leverage the benefits of digital finance, particularly in enhancing retail participation in the capital market, there is a need for intensified digital and financial literacy programs. The Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NGX) should collaborate with fintech firms to provide user-friendly educational tools targeted at retail investors, especially in underserved regions.