Impact of Point-Of-Sales (POS) Transactions on Stock Market Liquidity in Nigeria: An Empirical Exploration

Abstract

The study aimed to explore the impact of point-of-sales (POS) transactions on stock market liquidity in Nigeria between January 2012 and December, 2021. Fully Modified Ordinary Least Squares regression technique was applied to the data obtained from the Statistical Bulletin, Statistics, and Monthly Economic Reports published by Central Bank of Nigeria. POS digital finance transaction was found to have negative and significant impact on Nigerian stock market turnover ratio. Considering the prominence of POS digital financial innovation in Nigeria, this study isolated the innovation for study in terms of its role in stock market liquidity in a developing country. This study concluded that, rather than promoting stock market liquidity, digital finance channel of POS shrank the liquidity of the Nigerian equity market. The study was limited to only POS transaction among other digital financial innovations. However, the significance and prominence of POS in the Nigerian financial market makes the innovation worthy of careful and separate investigation. The finding of this study may not be unconnected with the fact that in Nigeria, POS transactions are basically used for consumption and other daily transactions of which stock market transactions may not constitute a major part. It can therefore be recommended that Government should encourage the use of POS terminals for stock transactions by giving incentives to users of POS for stock market dealings in Nigeria.