📖 ABSTRACT/OVERVIEW
Digital transformation investments in Nigerian commercial banking have accelerated dramatically over the past decade, yet causal evidence linking specific digital transformation initiatives to measurable long-term performance improvements remains methodologically limited in the existing literature. This study conducts a longitudinal investigation of digital transformation outcomes in Nigeria's commercial banking sector, spanning a 10-year period from 2014 to 2023, using panel data from 14 banks listed on the Nigerian Exchange Group. Digital transformation is operationalised through a composite index constructed from annual IT expenditure data, channel digitalisation metrics, and digital banking service breadth indicators sourced from annual reports and Central Bank of Nigeria returns. Bank performance is measured through return on assets, cost-to-income ratios, and net interest margins. The study employs dynamic panel data methods including the generalised method of moments estimator to address endogeneity concerns in the relationship between IT investment and financial performance. Results reveal that digital transformation effects on bank performance are subject to a two-to-three-year lag, and that the performance premium from digitalisation is moderated by bank size, with larger institutions deriving stronger returns. Mediation analysis identifies customer acquisition efficiency and operational cost reduction as the primary causal mechanisms. The study advances the digital transformation-performance literature through its longitudinal design, explicit causal mechanism identification, and Nigerian banking sector focus. Keywords: digital transformation, commercial banking, panel data, performance outcomes, Nigeria Exchange Group.
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