Cashless policy and financial performance of deposit money. Princewell 20 examined issues in economic policy drift in payment systems with reference to nigerias shift from a cashbased economy to a cashless society. Cashless policy aims to curb some of the negative consequences associated with the high usage of physical cash in the economy, including high cost of cash, high risk of using cash, high subsidy, informal economy, inefficiency and corruption cbn,2011. That policy will help modernize nigerias payment system, says gsma.
The cashless policy makes the process of payment seamless hence there would no longer be the need to move large sums in expensive highlevel security vehicles. This study when completed will add to the body of knowledge in the area of banking and finance as literature on cashless policy in nigeria is scarce. It prescribed a cash handling charges on daily withdrawal above five hundred thousand naira n500,000. Cbn suspends cashless policy, asks banks to refund. D department of accountancy, university of nigeria nsukka. Cashless policy and economic activities in developing. Since the declaration of cashless economy policy by the central bank of nigeria, many scholars have written on this subject matter. A critical analysis of cashless banking policy in nigeria. Sep 19, 2019 this is because the central bank of nigeria has reintroduced its cashless policy which stipulates a cash handling charge on daily cash withdrawals that exceed n500, 000 for individuals and n3m for. The paper examined the effect of cbns cashless policy on nigeria economy. A cashless policy was recently initiated to curb corruption among other objectives.
Apr 22, 2017 central bank of nigeria cbn, yesterday, suspended the nationwide implementation of the cashless policy indefinitely. Central bank of nigeria the cashless nigeria project. Aug 28, 2016 the impact of the cashless policy on economic growth of nigeria. The impact of the cashless policy on economic growth of nigeria. The central bank of nigeria cbn cashless economy policy is of no doubt an essential to the development of nigerias economy. A cashless economy is an environment in which money is spent without being physically carried from one person to the other. The study shows that the cash policy is reduction in the costs of printing the period post the cashless policy has generally been and managing large sums of money. In a circular released on friday, the apex bank instructed banks to revert to old. This study titled central bank of nigeria cashless policy and nigeria economy a study of cbn enugu intends to drive development and modernization our payment system in line with nigerias vision 2020. Given the policy s objectives, the paper xrayed the associated benefits of the policy. Nigeria abstract the paper discussed the effects of cashless policy on the nigerian economy, how it was kickstarted in lagos, means of payments both manual and electronic, positive and negative effects of cashless policy, benefits to the economy and stakeholders, suggestions were made. The banks were directed to put a hold on these charges until a directive is given by the cbn.
Jul 02, 2019 apr 21, the cbn in february announced its plan to extend the cashless policy to all the remaining states of the federation by oct. The first issue in the cashless economy is the issue of electronic purse. The main reason for the policy was to reduce the amount of. As part of our ambition to be one of the best 20 economies before the year 2020, cbn informed the world that nigeria would commence the process of changing to a cashless economy by january 2012. Through the help of the cashless policy, financial transactions are initiated and completed without the need for cash. This is an economic system where all the business transactions in a particular country are performs with physical cash. The effect of cashless policy of government on corruption in. Corruption has been identified as a complex, endemic, and multilayered problem that threaten the very existence of nigeria and various efforts have been made by nigerian government to curb the menace. The ease of conducting financial transactions is probably the biggest motivator to go digital. There was the recapitalization agenda, then the redenomination of the naira, the noninterest islamic banking and most recently the cashless economy. Pdf effects of cashless economy policy on national development.
Nigeria goes cashless april 1 as cbn insists on policy. An empirical analysis of the benefits of cashless economy on. This page sells the central bank of nigerias cbns new policy on cashbased. Cashless economy pros and cons of cashless society in india. The policy stipulates a free cash withdrawal and lodgments by individual and. The introduction of the policy in nigeria therefore brings up issues. High cash usage results in a lot of money outside the formal economy, thus limiting the effectiveness of monetary policy in managing inflation and encouraging economic growth. In a circular signed by dipo fatokun, director, banking and payments system. Effects of cashless economy policy on financial inclusion in.
Cashless policy could often be affected by physical challenges such as high rate of illiteracy, inadequate sensitizationeducation of the benefits of cashless policy, and inadequate logistics such as the provision of internet connections in commercial areas, computers and point on sale pos machines. Cashless definition is not having or involving cash. This study therefore assessed the perceptions of stakeholders on the types of corruption that can be reduced. Cashless economy, cashless policy, national development, nigeria 1. The impact of central bank of nigeria cashless policy in nigeria economy. Commencing from june 1, 2012, a daily cumulative limit of n150,000 and n1,000,000 on free cash. Effect of cashless policy on small and medium business in nigeria.
The impact of cashless policy on the economic growth of nigeria, free undergraduate project topics, research materials, education project topics, economics project topics, computer science project topics, hire a data analyst. This is because the central bank of nigeria has reintroduced its cashless policy which stipulates a cash handling charge on daily cash withdrawals that. The policy aims at reducing not eli minating the amount of physical. It is in this regard that the central bank of nigeria cbn introduced the cashless policy with the objective of promoting the use of electronic payment channels instead of. You just need your mobile phone or debit card to make payment these days. Cashless policy and contradictory fiscal policies punch. Theoretical background cashless economy is not the complete absence of cash, it is an economic setting in which goods and services are bought and paid for through electronic media. Sc department of banking and finance, university of nigeria nsukka abstract. This makes the country to be heavily cash based economy. The impact of the cashless economy policy on nigerian. Large volumes prosperous for nigeria considering rapid economic ofcash need intense security and transportation is growth. Cashless nigeria the central bank of nigeria cbn has introduced a new policy on cashbased transactions which stipulates a cash handling charge on daily cash withdrawals that exceed n500,000 for individuals and n3,000,000 for corporate bodies. However, the cost of cash to nigeria financial system is high and increasing. Section 5 and 6 highlights the expected benefits and the challenges facing the cashless policy in nigeria and section 7 discusses the policy implications of cashless banking in nigeria.
A cashless economy is a shift from cashbased transactions to electronicbased transactions. A cashless economy simply illustrates a gradual or a radical movement of the entire. Effect of cashless banking on unemployment rate in nigeria. Hence, any policy that promotes cashless payment will not affect the economy immediately. For example, ejiofor and rasaki 2012 have noted that the cbn commenced the pilot scheme in lagos state apparently relying on its commercial stamina as nigerias business hub. Prospects of cashless policy in nigeria convenience. Cashless economy is very good for stress free life. Financial transactions involving the use and movement of physical cash are gradually declining with the introduction of the cbnas cashless policy. In nigeria as it is in many developing countries, cash is the main mode of payment. In 2015, the central bank of nigeria issued a notice to all banks that began collecting charges on withdrawals above the threshold in the remaining 30 states. Table 1 shows the view of respond ents on benefits of cashless economy in nigeria. Cashless economy and financial statement reporting in nigeria emengini, steve emeka ph. Pdf returns of the cashless policy in nigeria mpho. This study examines the cashless economic system so as to assess its.
This policy seeks to turn a money economy to what can be regarded as a cashless economy. The cashless policy in nigeria international journal of humanities. Preface why the central bank of nigeria made the cashless policy. The central bank of nigeria cbn cashless policy and the. Nigeria is not left out of this trend as the cashless policy is the latest innovation of the central bank of nigeria, among its numerous efforts to reform the nigerian financial system. A behaviourial change to economic growth cashless economies are those that use mostly plastic or digital money and thus minimal cash or money in paper form. Pdf impact of cashless economy in nigeria researchgate. High cash usage enables corruption, leakages and money laundering, amongst other cashrelated fraudulent activities. The central bank of nigeria cbn stated the following as key reasons why the cash policy was introduced. The cashless nigeria project central bank of nigeria. Abstract prior to this time, nigeria economy was largely described as cash. The adoption of one type of cashless payment will affect another type of cashless payment in the short run.
In a cashless society, the unit of account example, naira is seen as a national affair that is provided by the state. Nigeria goes cashless april 1 as cbn insists on policy implementation barring any changes, nigeria is set to fully go cashless across the country as the central bank of nigeria cbn has said there is no going back on the full implementation of the federal governments cashless policy which is expected to commence from april 1 across the country. The impact of adopting cashless payment on economic growth can only be significantly observed in the long run. This is known to have several negative implications for an economy, which is the reason why the central bank of nigeria 2011 introduced the cashless policy in 2011 with the hope of curtailing. The policy was introduced by central bank of nigeria cbn in december 2011 and was kickstarted in lagos in january 2012. Africas quest for a cashless economy gains momentum africa. Pdf this paper studied the impact of cashless policy in nigeria. This study is poised to investigate and appraise to the best of the researchers ability the impact of the cashless economy policy on nigerian citizens and the economy at large. The central bank of nigeria cbn has suspended its earlier directive on the implementation of cashless policy.
Omotunde et al 20 posits that cashless economy policy initiative of the central bank of nigeria cbn is a move to improve the financial terrain but in the long run sustainability of the policy will be a function of endorsement and compliance by endusers which can which can be aimed at reducing bank liquidity risks. Africas quest for a cashless economy gains momentum. The purpose of this study is to expose the merits of the cashless economy to nigeria populace, and as well the pains of a cashbased economy. Cashless payment and economic growth financial innovation.
The economy is being reformed, the institutions are being reshaped and laws are. Cbn suspends nationwide implementation of cashless policy. This article examined development and challenges of cashless policy in. Apr 21, the central bank of nigeria cbn has suspended its earlier directive on the implementation of cashless policy. The impact of central bank of nigeria cashless policy in.
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