1.1 Background to the Study
Financial policy is the procedure by which the fiscal authority of a nation, regularly the national central bank or currency board, controls either the expense of extremely transient acquiring or the money related base, frequently focusing on an inflation or loan fee to guarantee value dependability and general trust in the cash. The lead of monetary policy by the Central Bank of Nigeria since 2008 has been intended to: impact the development of cash supply reliable with the necessary total Gross Domestic Product (GDP) development rate, guarantee budgetary soundness, keep up a steady and serious conversion standard of the naira, and accomplish positive genuine loan fees. A country ought to energize a payment framework that is sheltered, appropriate and sensible so as to support monetary advancement (Ajayi and Ojo, 2006). As indicated by an introduction by Banking and Payment System Department of Central Bank of Nigeria in July 2015, Nigeria has been falling behind in the reception of e-payment not at all like many developed countries like Denmark, Norway, Sweden, UK, USA, France, Switzerland, Philippines, and the preferences.
The payments framework assumes an essential role in any economy, being the channel through which monetary assets stream from one stage of the economy to the next. It, hence, speaks to the of the modern market economy. Basically, there are three critical roles in the payments system, namely: the monetary policy role, the financial stability role and the overall economic role (CBN, 2015). To additionally improve the proficiency of the payment framework, the CBN in 2004 gave the wide rules on electronic banking (e-banking). E-banking practice in Nigeria will keep on being advanced in accordance with worldwide pattern.
The Central Bank of Nigeria, as a basic of their desire to be a standout amongst other 20 economies before the year 2020, educated the world that Nigeria would initiate the way toward changing to a cashless economy by January 2012. "Cash Less Policy" was introduced by CBN with decrease (and not Eliminate) the measure of physical money (notes and coins) flowing in the economy subsequently reassuring the utilization of electronic based stages for repayment or payment for products and enterprises. The targets of Cash Less Policy are: to drive advancement and modernization of our payment frameworks in accordance with vision 2020, to diminish cost of banking administrations, debasement, significant expense of money handling, money related violations and exercises of the casual economy, to drive Financial incorporation (Bringing in the unbanked into the financial system), to improve viability of Monetary Policy and to appropriately designate expense of preparing money to substantial money users. The Policy content is as per the following: Maximum day by day money withdrawals of N500,000 for individual account holders; Maximum day by day money withdrawals of N3,000,000.00 for Corporate account holders; Banks are not permitted to offer Cash-in-Transit (CIT) administrations to their customers. This administration is exclusively domiciled with authorized CIT organizations, for example, Bankers' Warehouse and so forth. Third party cheques above N150,000 cannot be changed over the counter, they should be presented through the clearinghouse or record to account Transfer; The limits of N500,000 and N3M for Individuals and Corporates separately are total and incorporate ATM withdrawals; The limit applies to all accounts claim by same client. The penalties of for non-compliance are as follows: 3% on sums pulled back in excess of the set furthest reaches of N500,000 for Individual accounts (E.g. a withdrawal of N600,000 will draw in 3% charge on N100,000 which means N3,000); 5% on sums pulled back in excess of the set furthest reaches of N3M for Corporate accounts (for example a withdrawal of N3.5M will draw in 5% penalty on the excess of N500,000 which means N25,000) ; CBN to authorize banks that do not make a difference penalty on excess withdrawal ; CBN to endorse banks that abuse the CIT mandate; Charges will apply on exchanges done over the 36 states and FCT from July 1, 2014. The method of activity of the arrangement is: Lagos state was utilized for the pilot stage which began on January 1, 2012. The strategy was reached out to Abia, Anambra, Kano, Ogun, Rivers and FCT in July 1, 2013. CIT administrations stopped January 1, 2012. Across the country take-off in staying 30 states from July 1, 2014 and the approach applies to just Naira exchanges. Foreign Currencies are absolved. The exceptions from the arrangement are: Microfinance Banks and PMIs are absolved; Ministries, Departments and Agencies (MDAs); Embassies, Diplomatic Missions and Multilateral and Aid Donor Agencies in Nigeria. The normal advantages of the approach are: Convenience and simplicity of payment for products and enterprises, decreased danger of money related crimes, cheaper expense of banking administrations and simple access to credits and increased monetary advancement, tax collection and greater financial inclusion.
The sudden increase in Information Communication Technology (ICT) is what has made cashless banking both conceivable and important internationally. Cashless banking system introduction in Nigeria has brought about changes in the banking patterns of the government, organizations, and individuals. It has hurled such a significant number of difficulties to all the parties as well. In this manner, this study therefore investigates the role of cashless policy and stock market performance in Nigeria.
1.2 Statement of the Problem
The introduction of the cashless policy the Central Bank of Nigeria brought e-products like the utilization of Automated Teller Machines (ATM), Point of Sales (POS), portable banking, web banking, Nibbs Electronic Funds Transfer (NEFT), Nibbs Instant Payment (NIP) moves, and others to the fore. This became possible because of the rise in ICT globally. The deposit cash banks put a great deal in ICT so as to confront the difficulties acted by cashless policy so like to stay relevant and competitive.
Past studies like Taiwo, Ayo, Afieroho and Agwu (2017), Tunmibi and Falayi (2013), Ajayi (2014), Omotunde and Ezuwore Obodoekwe, Eyisi, Emengini and Alio (2014) focused on the prospects, challenges, and benefits of the policy, concentrating on whether the policy has achieved the stated objectives actually outlined by the CBN at the time of introducing the policy. Ngango (2015), Obiekwe and Anyanwaokoro (2017) really utilized the e-banking products to proxy cashless banking and found that they are positively identified with the performance of banks. Abaenewe, Ogbulu, and Ndugbu (2013) found that the appropriation of electronic banking has emphatically and altogether improved the returns on equity (ROE) of Nigerian banks. Then again and unexpectedly, it additionally uncovered that e-banking has not altogether improved the returns on assets (ROA) of Nigerian banks which in turn has a positive impact on the stock market.
In this manner, the results of earlier researches uncovered clashing outcomes and none of the studies utilized more than three variables to proxy cashless banking. The study will investigate the role of ATM exchanges, POS exchanges, Internet banking transaction on stock market performance in Nigeria.
1.3 Objectives of the Study
The objective of this study is to investigate the role of cashless policy and stock market performance in Nigeria. However, the specific objectives are:
i) To investigate the performance of return on assets in the stock market
ii) To examine the impacts of the cashless policy on the economy o Nigeria
iii) To understand the challenges facing cashless policy in Nigeria
1.4 Research Questions
The followings are the research questions in which this study intends to answer:
i) What is the performance of return on assets in the stock market?
ii) What are the impacts of the cashless policy on the economy o Nigeria?
iii) What are the challenges facing cashless policy in Nigeria?
1.5 Research Hypothesis
The following hypotheses were formulated in the course of this study:
i) There is a significant relationship between performance of return on assets and cashless policy in the stock market
ii) There is no significant correlation between cashless policy and the economy of Nigeria
1.6 Significance of the Study
This study is significant as it will help the government, bankers, policymakers as well as the general public to understand the importance o cashless policy and why it important to adopt this policy for better economic growth in the country.
1.7 The Scope of the Study
This study will be carried out among bankers of three banks namely: Access Bank, Zenith Bank and Eco Bank in Lagos. A total of sixty respondents (twenty from each bank will be chosen) will be sampled.
1.8 Definition of Terms
The following terms were used in the course of carrying out this study:
Electronic Payment System: social infrastructures that support all economic activities, and the financial markets will require more sophisticated payment systems with greater safety and efficiency.
Automated Teller Machine (ATM): This is an automated teller machine that dispenses cash and basically performs all other functions done by a teller in a banking hall like balance inquiry, give mini statements and bills payment, recharge functions etc. A personal identification number (PIN) has to be entered along with credit or debit card to access cash.
Point of Sale (POS) Machine: Point of Sales (POS) machine or terminal is an electronic device used in payment for goods and services. You find it in supermarkets, hotels, filling stations, shops etc.