TABLE OF CONTENTS
Title Page i
Approval Page iii
CHAPTER ONE: INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 4
1.3 Objectives of the Study 5
1.4 Research Questions 6
1.5 Research Hypothesis 6
1.6 Significance of the Study 7
1.7 Scope of the Study 7
1.8 Definitions of Terms 8
CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction 9
2.2 Conceptual Framework 9
2.3 Theoretical Framework 11
2.4 Empirical Review 16
2.5 Summary of Literature Review 27
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction 28
3.2 Research Design 28
3.3 Nature and Sources of Data 28
3.4 Return on Assets (ROA), Return on Equity (ROE) and Margin 28
3.5 Return on Equity 29
3.6 Model Specification 29
CHAPTER FOUR: PRESENTATION AND ANALYSIS OF RESULT
4.0 Presentation and Analysis of Data 32
4.1 Evaluation Based On Economic Criteria 34
4.2 Evaluation Based On Statistical Criteria 35
4.3 Student T-test 35
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of Findings 37
5.2 Policy Recommendations 38
5.3 Conclusion 39
1.1 Background to the Study
The coming into existence of the internet has helped to greatly improve the operations of commercial banks in Nigeria. The delivering of electronic services to businesses and consumers has been going on for years now. The internet is a fast spreading service that allows customers to use computers or any of their internet enabled devices to access account-specific information and possibly conduct transactions from remote location such as at home quickly and successfully.
Debit cards, credit cards, ATM cards seem to make life very easy because without them, today’s life will be full of misery. In this recent time, retail banks are now offering their services mostly through their internet branches. Internet banking is simply an electronic payment system which helps customers of any financial institution or bank to conduct any transaction.
The introduction of these internet enabled devices brought increased enabled devices for competition in the banking industry, which has gone a long way
to reducing customers waiting time for banking transactions. In Nigeria, this networking began with LAN (Local Area Network), MAN (Metropolitan Area Network) and later the WAN (Wider Area Network).The coming into existence of the internet banking has made transaction and data processing very accessible for quick management decision making.
The rate of wholesale and retail banking services has been increased through internet banking.The prospects of reducing the cost of operations revenue actually is seen as a motivator in the investment in internet banking by banks according to Simpson, J. (2002). However,on the other hand the adoption of internet banking has also brought notable challenge to the industries in terms of exposure of risk. Since the introduction of this system, it has been noticed that the volume of deposits has increased,and also the fraudulent practices in Nigerian banks.That is the reason why Ovia, J. (2001) stated in the mid 1990s Nigeria’s banking scene has witnessed phenomenal changes which can be seen in the enormous volume and complexity in service delivery or product liberalization of finance and process re-engineering in business.
In the recent time, it has been observed that a large number of literature have totally ignored the internet banking and compare electronic money with substitution of currency through electronic gadgets such as a virtual currency and smart cards. Internet banking is simply when devices are being used. For example, Freedman (2000) proposes that electronic money and internet banking is made up of three devices; access cards, stored value cards and network money. Electronic money is the sum of network money and stored value cards.
REVIEW OF THE RELATED LITERATURE
This chapter helps in providing the background of the context of the research problems. It reviews the existing literature on the effect of internet banking on profitability of commercial banks. We are going to review the following on this chapter: the conceptual framework, theoretical framework, empirical review and the summary of literature review.
2.2 Conceptual framework.
Internet banking is the use of internet in order to provide services like on line transfer, payment of bills and any other on line banking activity. Internet banking can be grouped into four major classes;
a) Telephone banking: this is a form of internet banking which is used by customers in order to perform or carry out retail transactions by calling phone communication units which are linked to an automated system of bank. Some activities that can be carried out are change of pin and transfer of funds.
b) Internet banking: this is also another form of banking which allows customers to make use of the bank’s website in order to make transfers, pay bills, view their bank statement without having to visit the banking hall.
c) Mobile banking: this is a form of internet banking which involves the use of cell or mobile phones in order to settle some transactions. Some of the examples of this transactions includes; change of pin, transfer of little amount of funds, phones recharge.
d) Electronic card: this is a form of internet banking is a physical plastic card that identifies the holder of the card. It is used for financial transactions on line which includes point-of-sale (POS)and Automated Teller Machine (ATM)which are used to authorize payments to the sellers. The various types of this cards include; credit and debit cards which have to be replenished.