Title: ``Impact Of Financial Technology Growth Risks On The Performance Of Banks In Nigeria
Authors: OSAGU, Michel Ifeakachuku, EHIEDU, Victor C Ph.D
Volume: 9
Issue: 6
Pages: 146-159
Publication Date: 2025/06/28
Abstract:
This study investigated the impact of FinTech growth risks on the performance of banks in Nigeria over the period 2003 to 2023. The research specifically evaluates how Cybersecurity Risk (CYR), Operational Risk (OPR), Regulatory and Compliance Risk (RCR), andTechnology Adoption and Integration Risk (TAIR)affect Return on Equity (ROE), a key performance indicator in the banking sector. Using secondary data sourced from the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC), the study employs multiple econometric techniques including descriptive statistics, Ordinary Least Squares (OLS) regression, multicollinearity tests, serial correlation tests, heteroskedasticity diagnostics, Ramsey RESET specification tests, panel unit root tests, and Johansen cointegration analysis. Descriptive statistics revealed a moderately dispersed distribution across the variables, while correlation analysis showed weak relationships between the FinTech risk proxies and ROE. The OLS regression results indicated that none of the FinTech growth risk variables had a statistically significant short-term effect on bank performance, although TAIR and OPR showed positive coefficients. Further diagnostics confirmed that the model was well-specified, with no issues of multicollinearity, serial correlation, or serious heteroskedasticity. Panel unit root tests confirmed the stationarity of the variables, and Johansen cointegration tests revealed the existence of a long-term relationship among the variables, despite weak short-term dynamics. The findings suggest that while FinTech growth risks may not immediately influence bank performance, their long-term effects are significant and cannot be overlooked. The study recommends that Nigerian banks invest in robust risk management frameworks, especially in areas of cybersecurity, operational efficiency, and regulatory compliance, while ensuring sustainable technology integration. Policymakers and financial regulators are also advised to enhance oversight and promote resilience in the evolving digital finance landscape. This research contributes to the growing body of literature on FinTech and bank performance in emerging economies, with specific insights for strategic planning and policy development in Nigeria's financial sector.