FROM CASH TO DIGITAL: ASSESSING THE INFLUENCE OF NIGERIA’S CASHLESS ECONOMY ON SMES IN NASARAWA STATE, KARU LGA.

Abstract

This study investigated the influence of Nigeria’s cashlesseconomy on the performance of small and medium-scale enterprises (SMEs) in Karu Local Government Area of 
Nasarawa State, with specific focus on internet banking and mobile banking. Using a survey design, primary data were collected through the administration of 400 questionnaires to SME operators, and the data were analysed using binary logistic regression. The findings revealed that both internet banking and mobile banking exert a negative but statistically insignificant effect on SME performance in Karu. These outcomes suggest that while digital banking platforms offer convenience and the 
promise of efficiency, their benefits remain largely unrealized in semi-urban contexts due to infrastructural constraints, unstable network services, high transaction charges, and low digital literacy. Many SMEs in Karu still rely heavily on cash transactions, thereby limiting the effectiveness of cashless 
instruments in enhancing profitability and growth. The study concludes that the cashless economy, as currently implemented, has yet to generate meaningful performance improvements for SMEs in Karu. It recommends stronger digital infrastructure, reduced transaction costs, and improved financial literacy as prerequisites for realizing the potential of internet and mobile banking in driving SME development. The findings underscore the contingent nature of digital finance adoption, demonstrating that regulatory initiatives such as the cashless policy can only yield performance gains for SMEs when matched with enabling infrastructure, affordable costs, and broader economic stability.