On Pooled OLS and Panel Regression Models for Assessing the Contributions of Electronic Payment System on Commercial Banks Profitability

Abstract

This study examined the impact of electronic payment system on the profitability of commercial banks in Nigeria. Pooled OLS and Panel regression models were fitted on the data extracted from the banks’ annual reports, Nigerian interbank settlement scheme, and central bank of Nigeria website. The assessment of the contribution of the various electronic payment systems considered were measured using Breusch and Pagan Lagrangian Multiplier (LM) Test, the Hausman Test, Stationarity Test, The Schwarz Criterion, and the Akaike Information Criterion. Results obtained showed that the random effect model was more appropriate than the fixed effect model for all the electronic payment systems considered in this study. Furthermore, it was discovered that there exists a positive relationship between the electronic payment systems and profitability of the commercial banks in Nigeria.