Abstract:
This study investigated the effect of electronic payment channels, namely Automated Teller Machines (ATMs), Point of
Sale (POS) devices, and Mobile Banking Services (MBB) on the performance of microfinance banks in the South West
region of Nigeria. Return on Assets (ROA) and Return on Equity (ROE) were employed as proxies for measuring the
performance of twelve microfinance banks in Nigeria. Secondary data from annual reports of the selected microfinance
were obtained from 2007 to 2021. Descriptive statistics, correlation analysis, and fixed effect regression model were
employed for the analysis. Results indicated that ATMs (0.0003, p<0.05) and POS channels (0.0116, p<0.05) have
positive and significant effect on the performance of microfinance banks, as measured by ROA and ROE. However,
findings revealed that MBB (0.226, p<0.05) had positive but insignificant effect on the performance of microfinance banks
in Nigeria. The study suggested that the adoption and effectiveness of MBB in this specific context may be hindered by
barriers such as limited technological literacy, lack of access to smartphones, and insufficient awareness and trust in
digital financial services. Therefore, microfinance banks should continue to invest in expanding their ATM and POS
networks, as these channels have demonstrated a significant positive impact on their profitability.
