Impact of Digital Payment Systems on the Aviation Sector Growth in Nigeria.

Abstract:

This study examined the effect of digital payment systems on the growth of the aviation sector in Nigeria using quarterly data spanning from 2010Q1 to 2024Q3. Specifically, the study assessed the effects of Point of Sale (POS) transaction values, Mobile Banking (MB) transaction values, Web-based Internet (WBI) transaction values, and Automated Teller Machine (ATM) transaction values on aviation sector output. Aviation sector output served as the dependent variable, while the selected digital payment indicators constituted the explanatory variables. The study adopted an ex post facto research design and a quantitative time-series econometric methodology, utilizing fifty-nine quarterly observations obtained from the Central Bank of Nigeria (CBN) and the Federal Airports Authority of Nigeria (FAAN). Data were analysed using descriptive statistics, correlation analysis, the Augmented Dickey–Fuller (ADF) unit root test, Johansen cointegration test, and Error Correction Model (ECM) estimation with EViews 10. EViews 10 was adopted because it provides robust and reliable procedures for time-series econometric analysis, including unit root, cointegration, and error correction estimation. The unit root results revealed that all variables were integrated of order one, I(1), while the Johansen cointegration test confirmed the existence of a stable long-run relationship among the variables. The empirical findings indicated that POS transaction values exerted a positive and statistically significant effect on aviation sector output; MB transaction values had a negative and statistically significant effect; WBI transaction values had a negative but statistically insignificant effect; and ATM transaction values had a positive and statistically significant effect on aviation sector output. The study concluded that digital payment systems significantly influence aviation sector growth, although the magnitude and direction of the effects vary across payment channels. Consequently, the study recommended expanding POS infrastructure, improving the reliability and security of mobile banking services, strengthening web-based payment platforms, and sustaining the deployment of Automated Teller Machines at airports to enhance the growth of Nigeria's aviation sector.