FINTECH ADOPTION AND STOCK MARKET DEVELOPMENT AS CATALYSTS FOR SUSTAINABLE CAPITAL FORMATION IN NIGERIA

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Authors

Gabriel A. Anidiobu, PhD¹ & Felix N. Ezeji, PhD²

¹Department of Banking and Finance

Enugu State University of Science and Technology, Agbani, Nigeria

²Research & Planning Department

Nigerian Maritime Administration & Safety Agency, Lagos, Nigeria

Corresponding Author:  +2347036610673; [email protected]

ABSTRACT

Research Purpose: This study assessed how fintech adoption proxied by digital payments rate, POS transactions and mobile money; stock market development measured by market capitalization growth, impacted sustainable capital formation in Nigeria, captured through gross fixed capital formation (GFCF).

Design/Methodology/Approach: Using quarterly data from Central Bank of Nigeria, Nigeria Inter-Bank Settlement System, World Bank/IMF and CEIC/Trading Economics (2012-2024), study applied a Vector Autoregression (VAR) model, adapting Law Siong Hook’s 2024 ADB framework to assess how fintech adoption and stock market growth affected capital formation.

Finding: Capital formation. in Nigeria showed persistence, with lagged GFCF remaining significant (Coef. = 0.28; p = 0.019). Fintech adoption via digital payments rate (Coef. = 0.12; p = 0.041) and mobile money value (Coef. = 0.09; p = 0.022) positively influenced capital formation, while POS transactions had only marginal impact (Coef. = 0.07; p = 0.054). Stock market capitalization growth also boosted GFCF (Coef. = 0.11; p = 0.036), whereas inflation reduced it (Coef. = –0.10; p = 0.026). Granger causality confirmed fintech indicators, stock market growth and inflation significantly drove capital formation, which in turn influenced market development, establishing a bidirectional relationship between capital formation and stock market growth.

Implications: Nigeria’s capital formation was self-reinforcing, empowered by fintech adoption and stock market development but stifled by inflation, stressing need for policies that foster innovation, deepen financial markets and ensure price stability to sustain investment growth.

Originality/Value Added: Study highlights need for integrated payment systems that connect traditional, digital and instant platforms to improve accessibility, efficiency and inclusiveness, thereby strengthening capital formation in Nigeria. Based on Technology Acceptance Model, It also shows digital finance adoption depends on perceived usefulness and ease of use, which ultimately shape its impact on capital formation in the economy.

Keywords:  Financial Technology, Stock Market, Capital Formation, VAR  Model and Nigeria 

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