THE EFFECT OF AUTOMATED TELLER MACHINES ON DEMAND FOR MONEY BEHAVIOUR OF STUDENTS OF THE UNIVERSITY OF IBADAN, NIGERIA

BY BODUNRIN OLALEKAN SAMUEL MATRIC NO: 139170

BEING AN ORIGINAL ESSAY SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF BACHELLOR OF SCIENCE(B.Sc.) DEGREE IN ECONOMICS, UNIVERSITY OF IBADAN. OCTOBER, 2011.

CERTIFICATION I certify that this study was carried out by BODUNRIN OLALEKAN SAMUEL, Matriculation number 139170, Department of Economics, University of Ibadan, under my supervision.

.................................. Date

.. Supervisor DR. OMO AREGBEYEN B.Ed. (Educ. Mgt./Econ.), M.Sc.(Econ.), Ph.D.(Ibadan). Department of Economics, University of Ibadan, Ibadan.

DEDICATION This research work is dedicated to the Glory of God and to my late loving maternal Grand Mother; Mrs. Esther Olaitan, my late father, Mr. Bodunrin and my Mother; Mrs. Modupe Bodunrin for the proper upbringing and love bestowed upon me.

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AKNOWLEDGEMENTS I am grateful to God almighty for his immeasurable grace, favour, provision and protection throughout my programme. My profound gratitude goes to my parent and every member of my extended family, particularly Mr. and Mrs. Ayannaike, Bros Niyi and wife, Engr. Peter Otunba and wife, The Ososanyas, and all my younger ones for their unending love, understanding and support. Thank you all. I also acknowledge and appreciate the supports i received from the all members of Gods family, particularly, Four square Gospel Church in Nigeria; Rev Akeju. Rev (Mrs.) Oluwaleye, the Odubeles, the Akangbes, Pas. Gbenga Odeogberin, Bro idowu Ofi, Engr. Wale Egbewole and pas. Christian Ernest, Arch Bishop Vining Anglican Church, Ikeja, RCCG, MFMCFUI and the DLCFUI. Thanks for being there for me. I cant but appreciate my supervisor, Dr. OMO AREGBEYEN for his careful corrections, suggestions and constructive criticisms which made this work a reality. More so, to all my lecturers who have taught me at one time or the other, the knowledge you impacted on me helped in writing this project. You are highly appreciated. In addition, i appreciate all my course mates both in my former department (Geography) and in my present department; the department of Economics for their love from the first day of contact till now, may the almighty God take you to a greater height in life and
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make you policy makers, problem solvers, movers and shakers of our nation, Nigeria and the World in general. God bless you all. Finally, to all my friends, particularly these two rare breeds; Ifeoluwa Akanni and Olalekan Aduloju BSc., FNIM, Oracle DBA, HSM, thanks for your prayers and unflinching supports.

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ABSTRACT The automated teller machines should really have impacts on money demand, if it does not, then its purpose have been defeated. The envisaged impacts will definitely be an engine of growth in the financial sector and help the country move towards a cashless society in the nearest future. This study explores the effect of automated teller machines on money demand behaviour of students of the University of Ibadan, Nigeria. Two hundred and twelve (212) campus resident students across the 9 halls of residence in the main campus were randomly sampled, using the stratified random sampling. A structured questionnaire was used to collect data. The analytical tool used was mainly descriptive and inferential statistics; using tabular frequency, percentage distribution, correlation and regression with the aid of the statistical package for social sciences (SPSS). About 95.8 percent of the sampled undergraduates operate a bank account, and about 89.6 percent of them have at least one ATM card. The empirical analysis indicates drastic reduction in average cash holdings with the possession/use of ATM cards among sampled students. The study therefore concluded that the possession /use of ATM cards have made impacts on the money demand behaviour of the students of the University of Ibadan. The study recommends that more ATMs should be installed on campus.

TABLE OF CONTENTS CONTENTS Certification Dedication Acknowledgement Abstract Table of Contents List of Tables List of Figures CHAPTER ONE: GENERAL INTRODUCTION 1.1 1.2 1.3 1.4 1.5 1.6 Statement of the Problem Aims and Objectives Justification of the Study Scope and Limitation of the Study Research Hypothesis Plan of the Study 1 2 2 3 4 4 PAGES i ii iii v vi viii ix

CHAPTER TWO: LITERATURE REVIEW 2.0 2.1 2.2 2.2.1 2.3 2.4 2.5 2.6 ATM; Concept, Issues and Evolution The payment System and ATM The Emergence of ATM and its technology ATMs Technology The role of Information technology on the banking Industry Theory of Money Demand ATM and Demand for Money; Empirical Studies Evaluation of the Literature 5 6 8 9 9 11 20 25

CHAPTER THREE: RESEARCH METHODOLOGY 3.0 3.1 Introduction Type of Data needed
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27 27

3.2 3.3 3.4 3.5 3.5.1 3.6 3.7 3.7.1 3.7.2 3.7.3

Source of Data Instrument of Data Collection Population of Study Sample/Sampling Techniques The Stratified random Sampling Application of the Sampling Techniques Method of Data Analysis Regression Analysis The effect of ATMs on money demand Correlation Analysis

27 27 28 28 28 30 32 32 32 33

CHAPTER FOUR: DATA ANALYSIS AND INTERPRETATION 4.0 Introduction 34 36 42 46 46 48 34

4.1 Descriptive Analysis 4.1.1 4.1.2 4.2

Respondents Banks Account Holding Profile ATM and Cash Holding of the Respondents Empirical Analysis

4.2.1.1 Correlation Analysis Results 4.2.1.2 4.2.1.2.1 Regression Analysis Results Regression of Pre-ATM Average Cash Holdings on Monthly Volume of Cash Transactions 4.2.1.2.2 Regression of Post-ATM Average Cash Holdings on Monthly Volume of Cash Transactions 4.3 Testing the Hypothesis

48

49 51

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION 5.1 5.2 5.3 Summary of findings Conclusion Recommendations ABOUT THE AUTHOR
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53 55 56 64

REFERENCES RESEARCH QUESTIONNAIRE

58 62

LIST OF TABLES Table 3.1 Table 3.2 Population by Residence Halls of Residence Sample Allocation 30 31

Descriptive Analysis Table 4.1 Table 4.1.1 Table 4.1.2 Respondents Profile Respondents Bank account holdings Distribution of Respondents holding Account by Banks Table 4.1.3 Distribution of respondents by mode of account operated Table 4.1.4 Distribution of respondents by Bank distance from the Campus Table 4.1.5 Distribution of respondents by ATM Card ownership Table 4.1.6 Table 4.1.7 Bank in which respondents owns ATM Cards Distribution of respondents by year in which they obtained their ATM Card(s) Table 4.1.8 Table 4.1.9 Table 4.1.10 Table 4.1.2.1 Table 4.1.2.2 Table 4.1.2.3 Convenience in the use of ATMs Functionality of ATMs around the Campus Distribution of respondents by the banks ATM they use. Monthly Volume of Cash Transaction Frequency of cash withdraws with ATM Card(s) ATM Card reduced my Cash Holding 40 41 41 42 42 43 43 39 40 38 38 37 35 36

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Table 4.1.2.4

Undecided, D&SD: I attribute this non-functionality of ATMs around Bank 44

Table 4.1.2.5

I support CBN Directives of Banks operating ATMs only in their branches 45 45 46

Table 4.1.2.6 Table 4.1.2.7

Descriptive Statistics of Pre ATM Descriptive Statistics of Post ATM Empirical Analysis

Correlation Analysis Results Table 4.2.1.1.1 Correlations between Pre ATM Average cash holding and Monthly Volume of Cash Transaction Table 4.2.1.1.2 Correlations between Post ATM Average cash holding and Monthly Volume of Cash Transaction Regression Analysis Results 4.2.1.2.1 Regression of Pre-ATM Average Cash Holdings on Monthly Volume of Cash Transactions Table 4.2.1.2.1 Table 4.2.1.2.2 Table 4.2.1.2.3 4.2.1.2.2 Coefficient of Determination ANOVA Table Regression Coefficients 48 49 49 47 47

Regression of Post-ATM Average Cash Holdings on Monthly Volume of Cash Transactions

Table 4.2.1.2.2 Table 4.2.1.2.3 Table 4.2.1.2.4

Coefficient of Determination ANOVA Table Regression Coefficients LIST OF FIGURES

50 50 51

Figure 2.7.1 Figure 2.7.2 Figure 2.7.3 Figure 4.1.1

Transaction Motive Demand for money Precautionary Demand for money Speculative Demand for money Banks used by Respondents
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14 15 16 37

CHAPTER ONE Introduction 1.1 Statement of the Problem The quantity theory of money as suggested by Irving Fisher in his influential book; the Purchasing Power of Money, published in 1911 states that If people use charge accounts and credit cards to conduct their transactions and [they will] consequently use money less often when making purchases, [since] less money is required to conduct the transactions generated by nominal income, velocity (the average number of times per year that a Naira is spent in buying the total amount of goods and services produced in the economy) will increase. The validity of this theory in Nigeria, most especially, the university campuses has been a bone of contention, as most students still hold large amount of physical cash despite the spread of ATM machines around these campuses. Of recent, in the premier University of Ibadan, there has been continuous siting of ATMs by banks around the campus premises, some of which are owned by; Afribank installed at UI gate, Fin bank at Agbowo, First bank at UI gate, Idia Hall and at the faculty of Education, Intercontinental bank installed at the faculty of Law, Sky bank located along Postgraduates School road, Sky bank installed at tantalizer, Stanbic IBTC at the Social sciences and Union bank located opposite Niser park. With all these ATMs around the campus premises, it is expected that the demand for real money balance by student should be on the downward side to conform to the quantity theory of money. There is therefore a paramount importance for there to be an intensive and detailed research, and analyses on the effect of the ATM machine on demand for money behavior of individuals, whether the spread of ATMs on campuses should be encouraged or not, whether the directive given by Central Bank of Nigeria (CBN) to commercial banks to curtail the spread of off-premise ATMs (according to CBN because of unhealthy competitions especially in public places) and the recent move towards a cashless society

in the year 2012 is necessary or not. In light of this, the study seeks to investigate the demand for money among students given the increased installation of ATM machines in every corner of the Campus.

1.2

Aims and Objectives The broad Objective this research work is to analyze and show empirically the

effect of ATM on demand for money behaviour of selected students of the University of Ibadan. The specific objective include to; a) Ascertain the diffusion of ATM cards among the Students; b) Characterize the demand for money pattern of students; and c) Evaluate the effect of the ATM cards/transactions on the demand for money behaviour of the students.

1.3

Justification of the Study

The findings of this study will be deeply appreciated, since such study has never been carried out in the University of Ibadan before. It will expose how the nearness to ATM Machines can influence the demand for money behaviour of students; it is rational to believe that students who are far from the location of automated teller machines will hold high amounts of cash so as to reduce the frequency of withdrawals as well as the cost associated with it. This study will enable us ascertain the extent at which the proximity of students to ATMs affect their money demand on average. Also, this study will provide a mechanism for estimating the volume of money balances held by students every month; Students like every other economic agents hold some amount as cash balance used for daily transactions and expenses, these amounts are easily estimated and quantified making inferences from the sample to be study to the total population.

The importance of the volume of money balances held by students on economic activities within the University of Ibadan community is also an essential findings that will be appreciated in this research, this will enable us see the economic reasons for the increasing establishment of several businesses within and around the campus, and its impact on economic activities of these businesses during and after sessions. More so, the findings of this study will aid the decisions of the school authority whether or not school to allow other commercial banks that are interested in sitting their ATM within the University of Ibadan and the implication of such actions on the welfare students and economic activities on the campus. Additionally, the services rendered by the Automated Teller Machines (ATM) that are placed in strategic locations within the University of Ibadan are best appreciated having had a detailed understanding of its impact on money demand of the students. Finally, this study will serve as a catalyst for further researches.

1.4

Scope and limitation of the Study The scope of this study is limited to full time undergraduate students of the

University of Ibadan who reside in the Halls of Residence in the main campus only. The Halls of residence that will be used in this research work will be the Nine Undergraduate Halls in the University of Ibadan namely; Independence Hall, Ransom Kuti Hall, Mellanby Hall, Nnamdi Azikwe Hall, Obafemi Awolowo Hall, Queen Elizabeth Hall, Queen Idia Hall, Sultan Bello Hall and Tedder Hall of Residence. This is due to accessibility and to allow a wide coverage of the targeted population.

1.5

Research Hypothesis

The hypotheses to be tested in this research work will be as follows Null hypothesis,

H0 : ATMs has no significant effect on the demand for money

behaviour of U.I Students.

Alternative Hypothesis, behaviour of U.I Students.

H1 : ATMs has significant effect on the demand for money

1.6

Plan of Study This study consists of five (5) chapters. Chapter one (1) will be the introduction

and problem statement. This chapter one gives an insight into the information about the topic of study and also information about the importance of carrying out such academic work. The objectives of the study will be stated also, the scope of the study and the statement of hypotheses that will be tested. Moreover, the chapter two (2) will review the past literatures in related studies. The theoretical framework of the study will be stated in this chapter. The chapter three (3) of this study will make up of the methodology adopted in data gathering for the success of the study, here the sample size will be outlined and the intended mode of analysis will be described. Furthermore, chapter four (4) of this study will deal with the data presentation and analysis. All data gathered from the field survey will be presented and analyzed. Finally, chapter five (5) will summarize the findings, draw conclusion from the analysis in chapter four and give the necessary recommendation.

CHAPTER TWO LITERATURE REVIEW 2.0 ATM; Concept, Issues and Evolution The automated teller machine (ATM) can be defined according to the Longman dictionary as a machine outside the bank that you can use to get money from your account. ATMs are self-service banking machines which are linked directly to a computer. They permit bank customers to withdraw money up to a certain amount. Customers are also allowed to deposit money into their accounts. Deposits are often made by placing the money in special container after the amount has been keyed into the terminal by the customer. Withdrawals are performed by customer entering the amount of money desired through a keyboard. The currency enclosed in clips can be dispensed to the customer through the machine. Automated teller machine or the cash machine was developed by Luther Simjian (1905-1997), a Turkish by origin in1939, when he came up with the idea of creating a "hole-in-the-wall machine" that would allow customers to make financial transactions. In 1939, Luther Simjian applied for 20 patents related to his ATM invention and field tested his ATM machine in what is now Citicorp. After six months, the bank reported that there was little demand for the new invention and discontinued its use, later John Shepherd-Barron's installed ATM at the Barclay bank in Enfield town in north London, United Kingdom on the 27 June 1967. Since then, the use of ATMs has grown enormously to replace the teller and Cheque payment system all over the world. There is no contesting the fact that the introduction of ATM has changed the face of electronic payment in Nigeria. Automated Teller Machines (ATM) was introduced into the Nigerian market in 1989, as a matter of fact; the very first ATM in Nigeria was installed by National Cash Registers (NCR) for the defunct Societe Generale Bank Nigeria (SGBN) in 1989. Banks in the country are now adopting Self Service (ATMs) technology because it is cost effective in the long run. In the past few years, Nigerian banks and the financial services industry in particular, have embraced the concept of e-money. Changes are beginning to

take place in the Nigerian financial landscape and customers are increasingly raising the hope of expectations for quality customer services. ATMs are placed not only in bank premises but also in locations such as shopping malls, airports, campuses, restaurants and any large places where commercial activities seems to be taking place. Consumers gain access to the use of ATMs through the ATMs plastic card with a magnetic stripe, codes and owners names encrypt on it. The encryption serves as user identification, where a four-digit authentication numbers possess only by the owner is used for withdrawals of funds. The emergence of this machine has given customers 24 hours everyday easy access to his or her cash deposit at the bank thereby increasing his or her spending rate, consumption pattern and also volume of transaction. It has also to some extent reduced exchange and transaction cost greatly, since it can be used as a means of withdrawing fund and also as a means of payment. ATMs can be used to perform so many transactions namely- Interbank Transfer services like Cash withdrawal, Account Balance Inquiry, Airtime Recharge, Fund Prepaid, Credit Transfer, Payment of Bills e.g. PHCN, MTN, DSTV, ZAIN,HITV etc. and many more.

2.1

The Payment System and ATM The teller payment system has denied the customers easy access to their money as

there must be compulsory eye to eye contact with the cashier before transactions can be carried out, third party exclusion, increase cost incurred from printing of tellers, and also, due to the obsessive ambition of most banking institutions to accumulation every form of profits, they thereby finding it difficult to employ adequate number of cashiers to ensure the efficiency of the teller payment system. Cheque withdrawal system which would have been the most efficient payment system, since it involves a third party still have the following shortcomings; It takes time to get cheque from one place to another especially when the drawee is in a distant place. It takes several business days before a customer that operate current account could be

allowed to make use fund from a cheque deposited. Also, the paper and printing involve in producing cheque make the payment system costly to the banks as such increasing its expenditure, which is transfer to the customers. Finally, it has been established that cheque payment system is very costly to the economy; e.g. in the United States, cheque payment system cost about 10 billion dollars per year to process. The ATM has proven to be the most efficient payment system, as the ATM has decreased the need to wait in line and has helped many people perform their transactions in a fraction of the time it once took, the cost of a single transaction performed at an ATM is potentially less than the cost of a transaction conducted from a teller, as ATMs are capable of handling more transactions per unit of time than are tellers (Laderman, 1990). Due to these and many more, the ATM is gradually replacing both the teller and the cheque payment system. Despite its many benefits, it has some shortcomings peculiar to Nigeria which are as follows; Normal challenges facing other businesses in Nigeria like power outages, telecoms breakdown and others do affect electronic payment platform like ATM services in Nigeria. There are also staff training issues that are to be sorted out, training and retraining of staff displaced by automation and customer/consumer education still lags behind. With regard to Power, most ATM machine runs on generators, UPSes and inverters to back up PHCN, in some extreme cases. It greatly influence consumers consumption pattern in that they are forced to withdraw high amount of money since the ATM restrict them to only high denomination currencies. The stability or strength of the network connectivity in the country has not really improved to ensure efficient and effective performance of the ATM. In addition, the recent increased ATM fraud has great challenge on its uses as a secure means of payment. In conclusion, the introduction of the ATM by the financial institutions is an attempt to reduce payment cost on the side of the bank, increase their market share, but has greatly increase cost on the part of the consumers.

2.2

The Emergence of ATM and its technology The influx of ATMs into the banking sector has brought with it other peripheral

technologies, which have also aided smooth electronic banking. Initially, banks in the country have been installing withdrawing-enabled ATMs, these days most have started moving toward the use of sophisticated ATMs used in the advanced countries. The Nigerian banks, particularly commercial banks have started issuing out the smart cards (microchip embedded cards) to their customers. Most of these newly issued ATM cards are supported by international financial institutions like VISA, MasterCard, verve etc. GTBank partners with MasterCard, UBA Group partners with VISA, while First Bank partners with verve and other banks issue their own cards in partnership with other international financial institutions. These new smart cards are multi-purpose debit cards which give banks customers access to their accounts and can be used to buy goods and services at Points of Sales (PoS) terminals and across other channels such as internet and withdrawals of cash from ATMs. In addition, the cards are accepted worldwide as means of payment for goods and services. The GTBank-MasterCard debit cards are accepted as means of payments for goods and services at over 29.4 million MasterCard locations and over 1.5 million ATMs in more than 210 countries. Most importantly, the new smart cards are protected by the most secured technology for cards transactions (they are microchip embedded cards).

2.2.1

ATMs Technology ATM technically is a switched, connected-oriented networking technology that

provides dedicated, high- speed connections to virtually an unlimited number of users. It operates on a cell-based fast-packet communication method that supports transfer rates from 1.544Mbps to 10Gbps. Dedicated media connection running in parallel allow an ATM switch to simultaneously support multiple conversation, eliminating the bandwidth connection and data bottlenecks found on shared-media networks such as Ethernet, Token Ring and FDDI. When Data is transferred in an ATM network, a switched virtual

circuit (SVC) is established between the sender and the receiver. The information is converted into fixed-length cell, which are transmitted through the network and reassembled into data packets at the destination. ATM relies on the reliability of digital lines to ensure data integrity and does not use error correction protocols. Numerous transmissions can take place at once, enabling ATM to accommodate multiple dialogues quickly, easily and reliably. ATMs dedicated bandwidth is capable of easily supporting data-intensive application such as high-resolution computer graphics, large data-base management systems and high-end engineering packages. The technologys high throughput and real-time information delivery also make it a perfect solution for emerging multimedia application combining data, voice and animation. ATM can be installed into an existing network as needed without upgrading the entire LAN.

2.3

The Role of Information Technology in the Banking Industry Information technology has penetrates and transform virtually every single

operation in the banking industry these days. Banks in the country are now adopting Self Service technology like ATMs and several others because of their cost effectiveness in the long run. In the past few years, Nigerian banks and the financial services industry in particular, have embraced the concept of e-money in its entire operational departments; although slowly since consumers and merchants change their payment habits more slowly. Nevertheless the change towards this payment system is taking place; payment patterns are changing worldwide as card-based payments are becoming a popular alternative to using cash; although cash payments still remain the preferred option for low-value expenses. Changes are beginning to take place in the Nigerian financial landscape and customers are increasingly raising the hope of expectations for quality customer services. Technological innovations have greatly improved the banking services and by extension the economy in general, setting the momentum for rapid economic development. They offer convenience to customers and provide time saving banking

services well beyond the traditional brick and mortar service period. They also ensure that a lot of cash is still within the banking system where it can be managed and channeled into productive use, instead of bulk withdrawals that we use to witness in the past, facilitating the movement towards a cashless society as proposed by the Central bank of Nigeria(CBN). It is good for customers to withdraw cash that they need by eliminating the risk of loss through theft and fire. ATM card technology is enabling the development of services in previously un-banked areas, helping to stimulate local economies and encouraging investment and tourists' spending; in the past, most rural areas has been classified as un-banked areas since banks found it unprofitable investing in these areas due to their low banking habit, the extension of the ATM to these area without physical presence of banks has further integrate the rural areas to the urban populace and ensure movement of cash from the urban to the rural part of the country, thereby, increasing local productivity and expanding tourism. ATM cards are an

important channel for banking in environments where the communication infrastructure is deficient. Finally, once an infrastructure for ATM cards exists, both traditional and non-traditional players will be able to contribute to developing the products to suite previously un-banked clients. All in all it is has been win-win scenario for all the parties concerned. Finally, IT deployment has assumed such high levels that it is no longer possible for banks to manage their IT implementations on a stand-alone basis with IT revolution, banks are increasingly interconnecting their computer systems not only across branches in a city but also to other geographic locations with high-speed network infrastructure, and setting up local area and wide area networks and connecting them to the Internet. As a result, information systems and networks are now exposed to a growing number. From Rahman (2010)s work technology products are enumerated as follows: Internet banking, Credit Card Online, Instant Alerts (through phone or e-mail), Mobile Banking, e-Monies Electronic Fund Transfer, Online Payment of Excise & Service Tax, Phone Banking, Bill Payment, Shopping, Ticket Booking, Railway Ticket Booking through SMS (mostly in

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the western world), Prepaid Mobile Recharge (through ATMs), Smart Money Order, Card to Card Funds Transfer, Funds Transfer (E-Cheque), and Mobile Banking.

2.4

Theory of Money Demand Several hypotheses have been developed to explain the demand for money; most

of these hypotheses provide explanation for the behavior of economic agents as regards money demand pattern. They are known as theories of the demand for money. They are: Quantity Theory of Money demand by classical Economists developed in 1911, the Keynesian theories of the demand for money (1936) and the Milton Friedmans modern quantity theory (1956) with its further development by William Baumol (1952) and James Tobin (1956).

Quantity Theory of Money Demand This theory was developed by the classical economists in the nineteenth by Irving Fisher and later refined at the start of the twentieth century by Alfred Marshall, and A. C. Pigou as the Cambridge version. The quantity theory of money is a theory of how the nominal value of aggregate income is determined. Because it also tells us how much money is held for a given amount of aggregate income, it is also a theory of the demand for money. Irving Fisher, in his influential book The Purchasing Power of Money, published in 1911, in a bid to examine the link between the total quantity of money M (the money supply) and the total amount of spending on final goods and services produced in the economy P Y, where P is the price level and Y is aggregate output (income) came up with a concept that provides the link between M and P Y which he called the velocity of money, the rate of turnover of money; that is, the average number of times per year that a naira is spent in buying the total amount of goods and services produced in the economy. Velocity V is defined more precisely as

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V=

From this, the classical economist came up with quantity theory of demand for money, which can be derived by making M the subject of the formulae. = When the money market is in equilibrium, the quantity of money M that people hold equals the quantity of money demanded Md, so we can replace M in the equation by Md. Using k to represent the quantity 1/V (a constant, because V is a constant), we can rewrite the equation as:
Md =

Since k is a constant, the level of transactions generated by a fixed level of nominal income PY determines the quantity of money Md that people demand. Therefore, Fishers quantity theory of money suggests that the demand for money is purely a function of income, because the quantity theory of money tells us how much money is held for a given amount of aggregate income, it is in fact a theory of the demand for money, which believed that people hold money only to conduct transactions .The demand for money according to this theory is determined by (1) by the level of transactions generated by the level of nominal income PY and (2) by the institutions in the economy that affect the way people conduct transactions and thus determine velocity and hence k. The Cambridge Version of the Quantity theory of Money This approach, also called the Cash balance approach is another variant of the quantity theory. It originated from Alfred Marshall and A.C. Pigou who were based in Cambridge University then. The theory demonstrated that money is capable of yielding utility in and of itself. This theory then tries to examine the determinant of individuals optimum money holdings and realized that any amount of money held in hand yield no income. As a result, money will be held as long as the utility derived from holding it in terms of both convenient and security outweighs the income loss by using the money to purchase the good for consumption. So, according to the Cambridge school, money

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provides two needs for the individuals who have it. Firstly, money is held because of the convenience it provides in transactions compared to other stores of value. It also provides security because it reduces the possibility of inconvenience or at worse bankruptcy from failure to meet unexpected obligations. From these, they were able to established that the most important variables in the desire to hold money from the view point of an individual are; the conveniences derived from holding the money for transaction purposes, the individual wealth and the rate of interest.

Keynes Liquidity Preference Theory This theory was developed by Maynard Keynes (1936) after he rejected the classical view that velocity was a constant and developed a theory of money demand that emphasized the importance of interest rates in his book The General Theory of Employment, Interest, and Money. This theory of the demand for money, he called the liquidity preference theory. The theory seeks to know why individuals hold money. He postulated that there are three motives behind the demand for money: the transactions motive, the precautionary motive, and the speculative motive. Transaction Motive Demand for money According to Keynes, individuals are assumed to hold money because it is a medium of exchange that can be used to carry out everyday transactions, i.e. the transactions demand for money arises from the lack of synchronization of receipts and disbursements. He emphasized that this component of the demand for money is determined primarily by the level of transactions people want to carry out. Because he believed that the volume of these transactions was proportional to income, like the classical economists, he took the transactions component of the demand for money to be proportional to income. i.e. M t = f (Y ) ;
d

Where M t represent transactions demand for money, and Y Income. This can be depicted as;

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Figure 2.4.1

Income, Y

M t = f (Y )
d

Real Money balance

Precautionary Demand for money Keynes also recognizes that people hold money for precautionary purposes in addition to the transaction motive. People hold money as a cushion against an unexpected need, in other words, people hold money for unforeseen contingencies or circumstances, i.e. to meet unexpected bills. It is believed by Keynes that the amount of precautionary money balances people want to hold is determined primarily by the amount of transactions that they expect to make in the future and that these transactions are directly proportional to income. Therefore, he postulated, the demand for precautionary money balances is proportional to income. i.e. M p = f (Y )
d

Where M p represent precautionary demand for money. this relationship can be depicted as;

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Figure 2.4.2 M p = f (Y )
d

Income, Y

Real Money balance

Speculative Demand for money John Maynard Keynes went a step further in adding the speculative demand in his analysis for the demand for money; he agree with classical Cambridge economist that money is a store of wealth and called this reason for holding money the speculative motive. Since wealth is tied closely to income, the speculative component of money demand according to Keynes would be related to income. However, Keynes looked more carefully at the factors that influence the decisions regarding how much money to hold as a store of wealth, and found out that interest rate is the key factor under this motive. Keynes divided the assets that can be used to store wealth into two categories: money and bonds. He also asked why individuals would decide to hold their wealth in the form of money rather than bonds. Keynes assumed that the expected return on money was zero in his time, unlike today. For bonds, there are two components of the expected return: the interest payment and the expected rate of capital gains. As we know, when interest rates rise, the price of a bond falls. If you expected interest rates to rise, you expect the price of

15

the bond to fall and suffer negative capital gains. In this case, people would want to store their wealth as money because its expected return is higher; its zero return exceeds the negative return on the bond. Keynes assumed that individuals believe that interest rates gravitate to some normal value, therefore according to Keynes, If interest rates are below a certain normal value, people expect it to rise and bond prices to fall, they therefore prefer to hold their wealth as money rather than bond, also if interest rates are above the normal level people will expect it to fall and bond price to rise, since the return for holding bond are expected to be high than that of money, bond will be prefer to money. From these, it was established that speculative motive is negatively related to the level of
d interest rates. i.e. M S = f (i )

. This can be depicted as;

Figure 2.4.3
d M S = f (i )

Interest rate, i

Real Money balance

In putting the three motives for holding money balances together into a demand for money equation, Keynes uses the demand for money balances given as

M = f i ,Y p + .

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This shows that demand for real money balance is negatively related to interest rate, while it is positively related to income. Further Developments in the Keynesian Approach Economists developed more precise theories to explain the three Keynesian motives for holding money. A key focus of this research was to understanding better the role of interest rates in the demand for money. Transactions demand. William Baumol and James Tobin independently developed similar demand for money models, which demonstrated that even money balances held for transactions purposes are sensitive to the level of interest rates. They considered a hypothetical individual who receives a payment once a period and spends it over the course of this period in developing their models. In their models, money which earns zero interest is held only because it can be used to carry out transactions. The conclusion of the Baumol-Tobin analysis is as follows: as interest rates increase, the amount of cash held for transaction purposes will decline, which in turn means that velocity will increase as interest rates. The transactions component of the demand for money is negatively related to the level of interest rates. Precautionary demand. We know that there are lots of benefits of holding precautionary money balances, but weighed against these benefit must be the opportunity cost of the interest forgone by holding money. The more money an individual holds, the less likely be or she is to incur the costs of illiquidity. But the more money the person holds, the more interest he or she is giving up. As interest rates rise, the opportunity cost of holding precautionary balances rises, and so the holdings of these money balances fall. Therefore, the precautionary demand for money is negatively related interest rates. Speculative demand. Tobin developed a model of the speculative demand for money that attempted to avoid the shortcoming of Keyness analysis. His basic idea was that not only do people care about the expected return on one asset versus another when of the returns from each asset. Tobin assumed that most people are risk-averse, and the return of money is zero. Bonds can have substantial fluctuations in price, and their returns

17

can be quite risky and sometimes negative. When the expected returns on bonds exceed returns on money, people might want to hold money as a store wealth because it has less risk. Tobin analysis also shows that people can reduce the total amount of risk in a portfolio by diversifying (by holding both bonds and money). His model suggests that people will hold bonds and money simultaneously as stores of wealth. Tobin attempted to improve on Keyness rationale for the speculative demand for money, but he was only partly successful.

Modern Quantity theory of Money This theory was developed by Milton Friedman (1956) in an article titled The Quantity Theory of Money: A Restatement. The article seems to refer to the Irving Fishers quantity theory but his analysis was more of Keynes. This theory states that the demand for money is influenced by the same factors that influence the demand for any asset. He then applied the theory of asset demand (that states that the demand for money should be a function of the resources available to individuals to money and the expected returns on other assets relative to the expected return on money). He identifies a number of variables which affect the demand for money, which are; Permanent income Bonds Equities Physical Goods Friedman formulated his demand for real money balances using the below equation;

Md = f Y p , rb rm , re rm , e rm P + Md Where represents demand for real money balances P

18

Yp represents permanent income(the present discounted value of all expected future

income) rb represents expected return on bond re represents expected return on equity

e represents expected inflation rate

rm represents expected return on money While the signs underneath the equation indicate whether the demand for money is Positively (+ve) related or negatively (-ve) related to the terms that are immediately above them. According to Friedman,

rb rm

) is the expected return on bonds relative to

money, as this variable rises, relative expected return on money falls and the demand for money falls. Also the term

re rm

) is the expected returns on equities relative to money, as this

variable rises, the relative expected returns on money falls and the demand for money falls. In addition, Friedman added that the variable

( e rm ) is the expected return on goods

relative to money. As this variable rises, the expected return on goods rises and the demand for money falls. Friedman went further to examine what influences the expected return on money, rm that appears in all the three terms, which he found to be the following two factors: 1. The services provided by banks on deposits included in the money supply, such as provision of receipts in the form of canceled checks or the automatic paying of bills. When these services are increased, the expected return from holding money rises.

19

2. The interest payments on money balances. NOW accounts and other deposits that are included in the money supply currently pay interest. As these interest payments rise, the expected return on money rises. Having examine these theories of demand for money, it should be worthy of note that interest rates, expected return on bond and expected return on equity will not be used to analyze student demand for money. Since student demand for money are mostly for transaction and precautionary purposes, Keynes liquidity preference theory will be used in this study with the exclusion of speculative demand for money.

2.5 ATM and Demand for Money: Empirical Studies Only few empirical studies have been done on this subject in the past. Although not all relates to students directly, yet inference can still be drawn on their applicability to the student environment. However, the relatively few studies in the current literature that are available on this subject yielded a results which are largely based on empirical analyses of macroeconomic time series, indicate a negative effect of card payments on the demand for cash, whereas the results relating to the effect of ATM transactions are less conclusive. In contrast, microeconomic studies point to a significantly negative impact of ATM transactions on the demand for cash. For the most part, however, these studies are based on relatively old data (Avery et al., 1986 for the U.S.A.; Boeschoten, 1992, for the Netherlands) and do not quantify the strength of the effect (Attanasio, et al., 2002 for Italy use data until 1995). Helmut (2005) studied the impact of ATM transactions and cashless payment on cash demand in Austria. In order to assess this effect of ATMs on money demand; the demand for cash was determined by the frequency of withdrawals and by the amount withdrawn. He found out that 94 percent of debit card holders use ATMs to draw cash, while only some 58% of Austrians regularly draw cash at bank counters. Moreover, 14% of respondents regularly acquire cash from other sources. A detailed analysis of the total amount withdrawn indicates that about 53% of total cash withdrawn comes from ATMs

20

and 37% from banks whereas the percentage shares of other sources of cash acquisition is around 10%. This increase in the use of ATMs shows that both banks and their customers are moving aggressively towards the total adoption of the e-payments system. The average cash holding is then computed to be half the typical withdrawal amount plus minimum balances, the undershooting of which triggers a further cash withdrawal, which follow the view that if individuals have several cash sources, the average cash holding was calculated to be half the sum of typical withdrawal amounts (Boeschoten, 1992). Average cash holdings are then regressed on the monthly volume of cash transactions, according to Helmut (2005) to examine ATMs Users cash holdings as it is been affected by the volume of transactions .The results show that, at the same transaction value, ATM users hold considerably less cash. The point estimates derived from the survey also indicate that individuals who draw cash exclusively from ATMs have cash holdings that are on average around 42% lower than those of individuals who draw cash exclusively at banks. This signifies that ATM use has a quantitatively significant impact on the demand for cash. Marshall and Heslop (1988) reviewed in Olatokun & Igbinedion (2009) studied a Canadian population, and found out ATM users to be young people with at least average incomes and some high school education especially those in higher institutions. They specifically found that respondents under the age of 35 were considerably more likely to use computerized banking, ATMs, and debit cards than older consumers, while consumers use of direct deposit increased with age. In these studies, the implications of the use of ATMs on cash holdings were not explicitly examined in details, rather most of them only focus on the demography features or status of users and the diffusion of ATMs in the targeted population. Rugimbanas (1995) also did a profile study of users and nonusers of ATMs in terms of demographic and perceptual variables. His study discriminate users from non-users, using the demographic variables of respondents and their perceptions of ATM attributes in order to assess the relative importance of these predictor variables on the use of ATMs. It was discovered from this study that perceptual variables

21

were far more successful as predictors of ATM service usage than respondent demographic variables. Rogers et al. (1996) stressed that even bank customers that are literate and extremely good in operating ATMs still find it difficult at times due to the maze of options available on an Automatic teller Machine. Most of them keep trying until they find solutions, but the elderly that face similar challenges is likely to quit than waiting to find solution, also the use of try by error in learning how to operate ATMs may lead to a longer queue that lead to the introduction of ATMs in the first place. Banks may be losing the elderly as ATM customers. Roger et al suggest education and machine redesign as a means of alleviating the ATM problems faced by the elderly. Most systems designers and bank officials assumed that ATM was easy to use and required no training, but it has been found out that all users irrespective of their age had problems using ATMs initially when no training and guidelines are provided, and that older adults have problems even after training. They indicated that banks could find better ways of teaching people how to use ATMs. In the survey, 13 banks were questioned randomly and only two were able to provide brochures that showed the user how to operate the ATM, and these brochures were perfunctory at best. In their study, non-users of ATMs did not even attempt to use the machines at all as they did not see a need for the service, probably explained by their lack of knowledge about how the system worked and their discomfort in having to learn it while others waited. Many of the respondents were not aware of the different options offered on ATM and were more predisposed to use it if they were provided training. Non-users and users stressed concerns about safety in using ATMs. Hone et al. (1998) in his study discovered that despite of the success, diffusion and widespread use of ATMs, a significant proportion of bank customers could not or would not use them, or experience difficulties in their interactions. Literacy was found to be a prerequisite to the use of ATMs. He therefore suggested that speech technology should be employed to accommodate the teeming numbers of non-users to the use ATMs, while at the same time, improving usability for all. This is likely to have positive

22

externalities, as it will include hands-free and eyes-free use for physically- and visually impaired users, and improved ease and speed of use through increased naturalness of the interaction. Hone et al. (1998) then went ahead to investigated user attitudes to the concepts of a speech-based ATM, via large-scale survey and a series of focus groups. He later detected that the idea of using speech for ATM transactions raise the question of privacy and security. Although visually impaired users were more likely to want speech technology, but the challenge this will pose on privacy and security boils down to the fact that enhancements to ATM will not necessarily suit all types of users. Di Angeli et al. (2002) examined technology adoption in different cultural contexts, analyzing the relationship between Hoffstedes cultural value dimensions and ATMs adoption in urban India. They proposed that the underlying inhibitors to ATM adoption in India were not intrinsically different from those determined earlier in Europe and North and South America. These inhibitors could be traced back to a few main factors, such as feelings of inadequacy, preference for human contact, lack of need and safety concerns. They believed that those who used ATM did so because they had a need for it, perceived it was easy to use, felt safe using it, and had positive attitude towards technology in general. These reasons appeared to be caused by different factors indifferent contexts due to different cultural values. For India, Di Angeli et al. (2002) stated that the feeling of inadequacy was the result of a strong value dimension expecting different access to resources as a function of peoples social status. The long-term orientation of Indians explained why they did not mind queuing to access basic financial services. Lee and Lee (2000) investigated the diffusion of various electronic banking technologies, such as ATMs, debit cards, smart cards, direct deposit, and direct payment, along with the characteristics of adopters and non-adopters based on the DOI theory. They used the 1995 Survey of Consumer Finances and discovered that more educated, affluent and younger consumers who were likely to communicate with professional information providers tended to adopt electronic banking technologies more readily than

23

their counterparts. Despite this, the specific factors that described adopters and nonadopters varied across different types of banking technologies. Olatokun and Igbinedion (2009) looked at the application of the theory of diffusion (DOI) to the adoption of ATMs in Nigeria. The study was carried out in Jos where 14 banks and 600 respondents were administered questionnaires. The demographic characteristics of the respondents reveal that most of them were students and youths. The theory of diffusion (DOI) postulates that five attributes of innovation influences its adoption (Rogers, 1995). These attributes had been used to examine the adoption of variety of communication and Information technology e.g. intranet Use (Horton et al, 2001), Internet Banking (Gerrard and Cunningham, 2003; Kolodinsky et al, 2004; Tan and Teo, 2000) etc. These attributes as used by Olatokun and Igbinedion (2009) are: Relative Advantage: This expresses to what degree the new product is better than the one it replaces, which could be judged not only by profit, but by factors such as the ease of use and storage etc. Compatibility: This relates to how the production of the innovation and the innovation itself takes into account the local values and customs of the adopters. It is the point at which an innovation fits into the specific society. The smoother the innovation fits into the culture, the faster the rate of adoption. Complexity: This is the extent of how complex it is for an adopter to understand and use an innovation. Logically, the harder an innovation is to use, or perceived to use, the less likely that an adopter would be able to consume it. Trialability: This is the capacity of the consumer to give the innovation a try or test before deciding to adopt it or not. This enables the rate of adoption to increase after a successful trial. Observability: This property is the idea that when an innovation benefit does not instantly solve a consumers problem or need, it will not diffuse through a society as quickly compared to an innovation that is more of a solution to a problem. It is also the degree to which the results of an innovation=\n are visible to others. What is observed is

24

what can be communicated, and this could affect diffusion depending on the outcome of what has been observed. The individual effects of these constructs were examined on Attitude, before the effect of attitude on the adopters intention to use was examined. The study according to Olatokun and Igbinedion (2009) showed that attitudinal dispositions significantly influence use of ATM. All the five attitudinal constructs have strong influences on adoption and intention to use ATM. it was also concluded that the respondents believed that the information concerning their use of ATMs was secure, and their using ATM was safe. This supported Sheths (1981) proposition that lowered perceived risk increases the likelihood of consumer adoption, Chang et al. (2001) that the use of ATMs appeared to be convenient compared with using the teller in the banking hall and Rogers (1995) that the harder an innovation is to use, or perceived to use, the less adopted by banks.

2.6

Evaluation of the Literature Most of the literatures did not look directly into the cash holding reduction effect

of ATMs given any transaction volume. They were mostly concerned about the adoption, diffusion and acceptability of ATMs Technology among different study groups. The demographic characteristics of the users and non-users as well as the attitudinal response of most users to the attributes of the technology also served as Centre of focus of these literatures. According to Helmut (2005), it could be inferred that ATM transactions and cashless payments affect optimal cash holdings in two ways. First, ATM transactions are likely to reduce the time-cost per withdrawal. In this event, consumers would withdraw cash more frequently and so hold smaller amounts of cash on average as discovered in Helmut Stix (2005). However, it could also be that bank counter withdrawals are merely substituted by ATM transactions and that all things considered the number of withdrawals does not rise. This study will therefore examine the question

25

of whether and to what extent ATM use affects withdrawal frequencies and hence the demand for cash Second, card payments permit direct access to the payers account, which means that only part of total transactions is affected in cash. This decline in cash transactions has a proportional effect on optimal cash holdings (Markose and Loke, 2003). If the study groups are more inclined to online transactions, this will definitely have a reduced effect on cash transactions and by extension cash holdings. So reduced cash holding could mean that most of the transactions are done online or that withdrawals frequency is very high due to the use of ATMs.

26

CHAPTER THREE Research Methodology 3.0 Introduction The methodology to be employed in this research work will involve the use of primary data that will be collected using stratified random sampling with the aids of questionnaires, and analyzed using the Regression Analysis, correlation analysis, Hypothesis testing with several table and charts. Also the Statistical package for social sciences (SPSS) as an electronic econometric package will be adopted for this research analyses. Below are the reviews of the tools 3.1 Type of Data needed The data needed for this research is obviously primary data- which are first hand data collected directly from the respondents or the targeted group with the aid of the questionnaire. Primary data will be used since the needed information does not exist in the form of secondary data anywhere and if available may not be reliable. 3.2 Source of Data Since the needed data to be use is primary data, it will be collected directly from the targeted group i.e. the students of the University of Ibadan using questionnaire method of data collection. 3.3 Instrument of Data collection The method to employ in collecting the needed primary data is the questionnaire; which is a document or form which contain questions designed to collect relevant statistical or socio-economic information from the respondents for the purpose of research or enquiry.

27

3.4

POPULATION of the Study The population to be studied is the full time undergraduate students of the

University of Ibadan that resides in the halls of residence irrespective of their level of study. The total number of these students is 14,688, i.e. excluding the part-time students, the post-graduates students and those that reside outside the campus or in the boysquarters around the campus environment. 3.5 SAMPLE/Sampling Techniques Due to cost and time constraint as well as to achieve a higher level of precision, 212 questionnaires will be distributed randomly. The sampling design to be used is in this study is the stratified random sampling due to the nature of the population. 3.5.1 The stratified random sampling The stratified random sampling can be defined as a sampling design in which the population is first stratified (divided) into homogenous groups and samples are drawn from each group using the simple random sampling techniques. Each group is known as stratum. Stratified sampling is suitable for heterogeneous population. Stratification means that before any selection takes place, the population is divided into a number of strata, and then a random sample is drawn from each stratum. The stratification factor could be sex, age, state, income group etc. For this research work the stratification factor will be the Residential Halls of residence. Stratification ensure that each type of a population member is included in the in the sample and hence yields a higher precision. In stratification, for the Population size = N

i th

stratum,

28

Sample Size = n

Sampling fraction =

n N

In this sampling method, a probability proportion to size (PPS) of certain percentage (depending on population size) of each strata is designed, which is then use to derive the sample size, n. Having considered this sampling design critically, in terms of the techniques, advantages and disadvantages, I have gone further to accumulate some basic knowledge about the targeted population (University of Ibadan students-Undergraduates only). Below are my findings: The numbers of stratums i.e. Halls of Residence are nine in numbers. The total number of undergraduates (targeted population) in the University of Ibadan main campus is 14110. There is variability in the numbers of undergraduates that resides in this Hall of residents, so this sampling method will be suitable for this study.

29

3.6

Application of the Sampling Techniques The population is already stratified i.e. it has been divided into strata using the Halls

of residence as the stratified factor. Table 3.1 Population by Residence S/n Hall Total number of students

1 2 3 4 5

Independence Kuti Mellanby Nnamdi Azikwe Obafemi Awolowo

1,663 1,145 1,109 1,659 1,410(undergraduates only)

6 7 8 9

Queen Elizabeth Queen Idia Sultan bello Tedder Totals

2,123 2,872 1,041 1,088 14,100

Source: the student union transition committee (SUTC). Since the population has already been stratified (divided) into different homogeneous Halls of residence, a probability proportion to size (PPS) of 1.5% of the students in each halls will be selected in order to ensure high level of precision in this research. That is;

30

1.5% of N = n.

So that sampling fraction,

n = 0.015 ; N

e.g.

1.5 1,663 = 25 . 100

Table 3.2 Halls of Residence Sample Allocation

S/N

HALL

Total Number Of Students (N) Sample selected(n) 1,663 1,145 1,109 1,659 1,410(Undergraduates only) 25 17 17 25 21

1 2 3 4 5

INDEPENDENCE KUTI MELLANBY NNAMDI AZIKWE OBAFEMI AWOLOWO

6 7 8 9

QUEEN ELIZABETH QUEEN IDIA SULTAN BELLO TEDDER

2,123 2,872 1,041 1,088

32 43 16 16

TOTALS
Survey July, 2011

14,100

212

From the above design, it was discovered that 212 questionnaires will be needed for this research work. i.e. the total number of respondents that will be selected randomly is 212 undergraduate students.

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3.7

Method of Data analysis

The method suitable for the analysis of data of this nature is the regression analysis, the correlation analysis as well as testing of hypothesis. For the sake of accuracy the statistical package for social sciences (SPSS) will be employed in the analysis of the data collected. 3.7.1 Regression Analysis

Regression analysis is the study of the nature or extent of association between two or more variables on the basis of the relationship between them with a view to predict the value of one variable from the other. This tool will be used the aid of the ordinary least square (OLS) method of the multiple regression. 3.7.2 The effect of ATMs on money demand.

ACH = 0 + 1 MVCT Where; ACH: Average Cash Holding

0 is the intercept
MVCT: Monthly volume of cash transactions. This can be estimated using these formulas;

0 = Y 1 X
1 =

nYi X i Yi X i n X i2 ( X )
2

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Where Y is the Average cash holding (ACH); and X is the monthly Volume of cash transaction (MVCT) 3.7.3 Correlation Analysis

Correlation measures the degree of linear association between two or more variables, i.e. is a magnitude that shows degree of linear association between two or more variables. The below formula will be used to test the degree of linear association.

r=

[nX (X ) ][nYi (Y ) ]
2 i 2 2 2 i i

nYi Xi Yi Xi

Where; the equations above show the degree of linear association between the dependent variable and one independent variable. Correlation coefficient (r) ranges from -1 to +1; r = +1, implies perfect positive linear association between the two variables. r = -1, implies perfect negative linear association between the two variables. -1 < r <-0.5, implies strong negative linear association between the two variables -0.5 < r <0, implies weak negative linear association between the two variables 0 < r <+0.5, implies weak positive linear association between the two variables 0.5 < r < +1, implies strong positive linear association between the two variables r = 0, implies there is no linear association between the two variables

33

CHAPTER FOUR Data analysis and Presentation 4.0 Introduction The results of the study are as shown in the following table and figures using the descriptive as well as the inferential method of statistical analysis with the information extracted from the questionnaire administered for the study. 4.1 Descriptive Analysis

Ninety two (92) of the respondents were female, this represent 43.4% of the total respondents. While One hundred and twenty (120) of the respondents are male, this represents 56.6% of the total respondents. The respondents that fall under age 21-25 have the overall highest number of one hundred and twenty (120) , while those between 21-25 have the second highest number of fifty (50), followed by respondents within age 26 and above being 40 in numbers with 56.6%, 24.5 and 18.9% respectively. Twenty- three (23) of the respondents were 100 level students, which represent 10.8 percent of the total respondents, while thirty-one (31) were 200 level students representing 14.6 percent, thirty-six were 300 level students representing 36 percent, 400 level were 110 in number representing 110 percent and 12 of the respondents were 500 level students representing 5.7 percent of the total respondents. This study sampling techniques was based on stratified random sampling, where the halls of residence of the respondents were used as the strata. The twenty-five (25) respondents selected from Independence hall represent 11.8 percent, Kuti hall respondents represent 8.0 percent, and Mellanby hall respondents represent 8.0 percent also, Nnamdi Azikwe hall respondents represent 11.8 percent, Obafemi Awolowo Hall respondents represent 9.9 percent, while Queens hall respondents represent 15.1 percent, Queen Idia hall

34

respondents represent 20.3 percent, while Sultan Bello hall and Tedder hall respondents both represent 7.5 percent individually. Table 4.1 s/n 1 Respondents Profile Demography Characteristics Male Female Frequency 120 92 212 52 120 40 212 23 31 36 110 12 212 25 17 17 25 21 32 43 16 16 212 Percent 56.6 43.4 100 24.5 56.6 18.9 100 10.8 14.6 17.0 51.9 5.7 100 11.8 8.0 8.0 11.8 9.9 15.1 20.3 7.5 7.5 100

All Gender Total

Age

16 to 20 21 to 25 26 Above

Total 3 Level of Study 100 200 300 400 500

Total 4 Hall of Residence Independence Hall Kuti Hall Mellanby Hall Nnamdi Azikwe Hall Obafemi Awolowo Hall Queens Elizabeth Hall Queen Idia Hall Sultan Bello Hall Tedder Hall Total
Field Survey, July 2011

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4.1.1 Respondents Banks Account Holding Profile Of the two hundred and twelve (212) respondents, two hundred and three (203) operate bank account, these represent 95.8 percent while only nine (9) respondents own no bank account, and these represent just 4.2 percent. Table 4.1.1 Respondents Bank account holding
Frequency No Yes Total Field Survey, July 2011 9 203 212 Percent 4.2 95.8 100.0

Table 4.1.2 shows the classification of the respondents that have bank accounts according the banks they used which was also represented by the pie-chart above. It reveals that 23.1 percent uses Guarantee trust bank (GTB), which represent the highest patronized bank on the campus, 11.3 percent uses First bank of Nigeria (FBN), while 6.1 percent uses United Bank for Africa (UBA) and another 6.1 percent of respondents that have bank account uses Intercontinental Bank, 5.2 percent uses Oceanic Bank, also 4.2 percent, 0.9 percent and 0.5 percent uses Sky Bank, First City Monumental Bank (FCMB) and First inland Bank (Fin bank) respectively. The other banks had 6.6 percent while 31.6 percent of these respondents that have banks account uses more one bank in no particular order.

36

Table 4.1.2 Distribution of Respondents holding Account by Banks

Frequency GTB First Bank FCMB OCEANIC Bank SKY Bank UBA FIN Bank Intercontinental Bank Others More than One No Response Total Field Survey, July 2011 49 24 2 11 9 13 1 13 14 67 9 212 Percent 23.1 11.3 .9 5.2 4.2 6.1 .5 6.1 6.6 31.6 4.2 100.0

Figure 4.1.1

Banks used by Respondents

More than one Bank 31.6% GTB 23.1% Others 6.6%

First Bank 11.3% UBA 6.1% Intercontinental 6.1% Finbank 0.5% Sky Bank. 4.2%
Field Survey, July 2011

FCMB 0.9% Oceanic Bank 5.2%

37

190 respondents out of the 212 respondents have savings bank accounts, this represents 89.6 percent, while only 4 of them uses current accounts, representing 1.9 percent of the respondents. In addition, 9 respondents, representing 4.2 percent of respondents uses both savings and current account, while another 9 respondents representing 4.2 were those that have no bank accounts at all.

Table 4.1.3 Distribution of respondents by mode of account operated

Frequency Savings Account Currents Account Both No Response Total Field Survey, July 2011 190 4 9 9 212

Percent 89.6 1.9 4.2 4.2 100.0

Table 4.1.4 shows that 50 percent of the respondents, which represents 106 respondents, indicate that their banks are not far from the campus, while 97 respondents representing 45.8 percent indicate that their banks are far from the campus. Table 4.1.4 Distribution of respondents by Bank distance from the Campus

Frequency No Yes No Response Total Field Survey, July 2011 106 97 9 212

Percent 50.0 45.8 4.2 100.0

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To ascertain the diffusion of ATM cards among the Students, the respondents were asked if they have an ATM Card(s), 89.6 percent of the respondents indicate the possession of an ATM Card(s), this represents 93.6 percent of those that have bank accounts and 190 respondents out of the 203 respondents that bank and the total 212 respondents, 22 of the respondents, which includes those that have no bank accounts, do not have ATM Cards. This means that 13 respondents have bank accounts but do not use ATM Card(s) for some personal reasons that range from safety to nearness of their banks and see no reason for the acquiring of the ATM card(s). Table 4.1.5 Distribution of respondents by ATM Card ownership

Frequency No Yes Total Field Survey, July 2011 22 190 212

Percent 10.4 89.6 100.0

The ATMs Users were also classified based on the bank(s) that issued the ATMs, and it was discovered that respondents that uses The Guarantee Trust Bank (GTB) ATM Card(s) were the highest representing about 32.1 percent of all the respondents that uses ATM cards and 28.8 of the total respondents, while about 20.3 percent of these respondents uses more than one ATMs from different banks, respondents that uses First Bank ATMs were about 12.1 percent of all those that use ATMs and 10.8 percent of total respondents. The third highest on the list were both intercontinental Banks and United Bank for Africa (UBA) with both having about 6.1 percent individually, while

respondent that uses the following banks ATMs; FCMB, Oceanic, Sky and Fin bank were about 1.9 percent, 5.7 percent, 4.2 percent and 0.5 percent of total respondents respectively.

39

Table 4.1.6 Bank in which respondents owns ATM Cards

Frequency GTB First Bank FCMB Oceanic Bank SKY Bank UBA FIN Bank Intercontinental Bank Others More Than One No Response Total Field Survey, July 2011 61 23 4 12 9 13 1 13 11 43 22 212 Percent 28.8 10.8 1.9 5.7 4.2 6.1 .5 6.1 5.2 20.3 10.4 100.0

Most of the respondents that uses ATM Card(s) obtained their ATM Card(s) in the year 2008 and year 2009, while only about 7.5percent, 10.4 percent, 12.7 percent and 9.9 percent of these respondents obtained their ATM Cards in the year before 2006, year 2006, year 2007 and year 2011 respectively. Table 4.1.7 Distribution of respondents by year in which they obtained their ATM Card(s)

Frequency Valid Before 2006 Year 2006 Year 2007 Year 2008 Year 2009 Year 2010 No Response Total Field Survey, July 2011 16 22 27 49 55 21 22 212

Percent 7.5 10.4 12.7 23.1 25.9 9.9 10.4 100.0

40

The respondents were interviewed on the conveniences with the use of ATMs, about 50.5 percent of those that uses ATMs, representing 45.3 of the total respondents agree that the use of ATMs is very convenient, about 46.3 percent these respondents that uses ATMs, representing41.5 percent of the total respondents, indicate that the use of ATMs is moderately convenient, while only about 3.2 percent, representing 2.8 percent of the total respondents, indicate that the use of ATMs is not convenient. Table 4.1.8 Convenience in the use of ATMs

Frequency Very Convenient Moderately Convenient Not Convenient No Response Total Field Survey, July 2011 96 88 6 22 212

Percent 45.3 41.5 2.8 10.4 100.0

About 71.1 percent of the respondents that uses ATMs, representing 63.7 of the total respondents, attested to the fact that the ATMs around the university of Ibadan only functions sometimes, while 9.. percent of the respondents accept that these ATMs function always and 16.0 percent disagree that these ATMs never function Table 4.1.9 Functionality of ATMs around the Campus

Frequency Always Functional Sometimes Functional Never Functional No Response Total

Field Survey, July 2011

Percent 21 9.9 63.7 16.0 10.4 100.0

135 34 22 212

41

About 52.6 percent of the respondents that use ATMs, representing 47.2 percent of the total repondents withdraws only from their Bank ATMs, about 23.1 withdraws from other banks ATMs while about 19.3 percent of these respondents withdraws from both their bank ATMs and other banks ATMs. Table 4.1.10 Distribution of respondents by the banks ATM they use.

Frequency Your Bank's ATM Other Bank's ATM Both No Response Total Field Survey, July 2011 100 49 41 22 212

Percent 47.2 23.1 19.3 10.4 100.0

4.1.2 ATM and Cash Holding of the Respondents The average monthly volume of cash transaction of the 212 respondents selected randomly within strata is about N9, 452:83, with range that lying between N2, 000:00 and 40,000:00 and standard deviation of about 5696.523.

Table 4.1.2.1 Monthly Volume of Cash Transaction

N Monthly Volume of Cash Transaction N Field Survey, July 2011 212 212 Minimum 2000.00 Maximum 40000.00 Mean 9452.8302 Std. Deviation 5696.52272

The effect of ATMs on the demand for money can be examined to some extent from the reduction of withdrawal frequency with the possession of the ATM Card(s). From table 4.1.2.2, it shows that out of the 190 respondents that possesses an ATM

42

Cards, 72 respondents representing 37.9 percent withdraws once a week, 60 respondents, representing about 31.6 percent withdraws every two weeks, while 14.7 percent withdraws once a month and the remaining 15.8 percent withdraws several times a week. Table 4.1.2.2 Frequency of cash withdraws with ATM Card(s)

Frequency Several times a week Once a week Every two weeks Once a month No Response Total Field Survey, July 2011 30 72 60 28 22 212

Percent 14.2 34.0 28.3 13.2 10.4 100.0

From table 4.1.2.3, when the respondents were asked if ATMs Card has reduced their cash holding, both the respondents that strongly agreed (34.4 percent) and those that agree (36.3 percent) that the use ATM Card(s) has reduced their cash holding were about 70.7 percent of the total respondents. 13.2 percent were indifferent, while only 5.2 percent and 0.5 percent disagree and strongly disagree respectively Table 4.1.2.3 ATM Card reduced my Cash Holding

Frequency Strongly Agree Agree Undecided Disagree Strongly Disagree No Response Total Field Survey, July 2011 73 77 28 11 1 22 212

Percent 34.4 36.3 13.2 5.2 .5 10.4 100.0

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The 40 respondents that were undecided, disagree and strongly disagree when all the ATM-using respondents were asked if ATM Card has reduced their cash Holding, were also asked if their response was due to the non-functionality of the ATMs within and around the banks, from table 4.1.2.4; 55 percent, representing 10.4 percent of the respondents said NO attributing their reasons to some other personal factors. The remaining 45 percent, representing 8.5 of the total respondents attributed their responses to the non-functionality of the ATMs within and around the banks.

Table 4.1.2.4: Undecided, D&SD: I attribute this non-functionality of ATMs around Bank

Frequency NO Yes No Response Total Field Survey, July 2011 22 18 172 212

Percent 10.4 8.5 81.1 100.0

More so, the views of the respondents were sampled on the central bank of Nigeria directives that banks that have off-premise ATMs should uninstall them, from table 4.1.2.5; 34.4 percent of the respondents strongly disagree, 30.2 percent disagree, 13.2 percent were undecided, 9.9 percent strongly agree and 8.5 agreed. Majority of the view were against the directives, anchoring their reasons on the need to bring banks closer to the people, conveniences, urgency, and accessibility. The total 18.4 percent, that select strongly agree and agree, hence support the directives base their support for the directive on the prevalent ATM frauds and non-functionality of off-premise ATMs.

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Table 4.1.2.5 I support CBN Directives of Banks operating ATMs only in their branches
Frequency Strongly Agree Agree Undecided Disagree Strongly Disagree No Resposne Total Field Survey, July 2011 21 18 28 64 73 8 212 Percent 9.9 8.5 13.2 30.2 34.4 3.8 100.0

From the descriptive statistics in table 4.1.2.6, it shows that the mean of the monthly volume of cash transaction is 9452.83; this means that on the average, the volume of cash transactions of students of the University of Ibadan is N9, 452:83. More so, the mean of the pre-ATM cash holding is 7568.3962; which mean that on the average, the students of the University of Ibadan hold N7568:40 for cash transaction of N9, 452:83 before the acquiring of ATM Card. Also, from the descriptive statistics in table 4.1.2.7, it shows that the mean of the monthly volume of cash transaction is 9452.83; this means that on the average, the volume of cash transactions of students of the University of Ibadan is N9, 452:83. More so, the mean of the post-ATM cash holding is 3545.2632; which mean that on the average, the students of the University of Ibadan hold N3, 545.26 for the same cash transaction of N9, 452:83 after the acquiring of ATM Card. Table 4.1.2.6 Descriptive Statistics of Pre ATM
Mean Pre ATM Average Cash Holding. 7568.3962 Monthly Volume of Cash Transaction Computed using SPSS 9452.8302 8909.30028 5696.52272 212 212 Std. Deviation N

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Table 4.1.2.7 Descriptive Statistics of Post ATM

Mean Post ATM Average Cash Holding. 3545.2632 Monthly Volume of Cash Transaction 3795.01953 190 Std. Deviation N

9676.3158

5738.73104

190

Computed using SPSS

4.2

Empirical Analysis

4.2.1 Impact of ATMs on Cash holdings given the Volume of Cash Transactions This section examine the linear relationship between monthly volume of cash transaction and average cash holdings before and after the acquisition of ATM Cards, i.e. the effect that the monthly volume of cash transactions will have on cash holding when the respondents have no ATM Cards and when they have ATM Cards. The importance of this approach is that it will enable examine clearly and quantitatively the effect of ATMs on money demand (Helmut 2005) by inspecting the change on average of cash holdings as monthly volume of cash transactions changes by a unit on average. 4.2.1.1 Correlation Analysis Results Table 4.2.1.1.1 shows that the correlation between the Monthly Volume of Cash Transaction and Pre ATM Average Cash Holding, which was estimated to be 0.352.this shows that there exist a positive but weak relationship between Monthly Volume of Cash Transaction and Pre ATM Average Cash Holding. Table 4.2.1.1.2 shows that the correlation between the Monthly Volume of Cash Transaction and Post ATM Average Cash Holding, which was estimated to be 0.417. This shows that there exist a positive (but stronger than the correlation coefficient obtain

46

in the pre-ATM Case) relationship between Monthly Volume of Cash Transaction and Post- ATM Average Cash Holding as expected. Table 4.2.1.1.1 Correlations between Pre ATM Average cash holding and Monthly Volume of Cash Transaction

Pre ATM Average Cash Holding. Pearson Correlation Pre ATM Average Cash Holding. 1.000 Monthly Volume of Cash Transaction Computed using SPSS

Monthly Volume of Cash Transaction 0.352

0.352

1.000

Table 4.2.1.1.2: Correlations between Post ATM Average cash holding and Monthly Volume of Cash Transaction

Post ATM Average Cash Holding. Post ATM Average Cash Holding Monthly Volume of Cash Transaction Computed using SPSS 1.000 0.417

Monthly Volume of Cash Transaction 0.417 1.000

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4.2.1.2 Regression Analysis Results 4.2.1.2.1 Regression of Pre-ATM Average Cash Holdings on Monthly Volume of Cash Transactions Table 4.2.1.2.1, which shows the model summary indicates the R Square (the proportion of pre-ATM cash holding explained by the monthly volume of cash transactions) as 12.4%. This shows that there are other variables that explain the pre-ATM cash holding other than the monthly volume of cash transactions. Table 4.2.1.2.2 shows the Analysis of Variance (Models used to assess the statistical significance of the relationship between a quantitative regressand and qualitative or dummy regressors. They are often used to compare the differences in the mean values of two or more groups or categories, and are therefore more general than the t test which can be used to compare the means of two groups or categories only). According to the table, the F- Calculated (29.614) is greater than the F-tabulated (3.84), this indicates that the relationship between pre-ATM cash holding and the monthly volume of cash transactions is statistically significant, hence as the monthly volume of cash transaction rises, the pre-ATM cash holding also rises. Finally, table 4.2.1.2.2 shows the regression coefficients, their standard error, t-statistics and their confidence interval. The correlation indicates that a positive relationship

between pre-ATM cash holding and the monthly volume of cash transactions. Also a oneunit changes in the monthly volume of cash transactions on average will lead to 0.55 unit changes in the pre-ATM cash holding, which ranges between 0.351 and 0.749 under a 95% confidence interval. Table 4.2.1.2.1 Coefficient of Determination

Model 1

R .352(a)

R Square .124

Adjusted R Square .119

Std. Error of the Estimate 8360.43168

a Predictors: (Constant), Monthly Volume of Cash Transaction

Computed using SPSS

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Table 4.2.1.2.2 ANOVA Table

Model 1 Sum of Squares Regression Residual Total 2069926501.081 14678331753.636 16748258254.717 Df 1 210 211 Computed using SPSS Mean Square 2069926501.081 69896817.874 F 29.614 Sig. .000(a)

a Predictors: (Constant), Monthly Volume of Cash Transaction b Dependent Variable: Pre ATM Average Cash Holding.

Table 4.2.1.2.3 Regression Coefficients

Model Unstandardized Coefficients Standardized Coefficients T Sig. 95% Confidence Interval for B

Std. Error

Beta

Lower Bound

Upper Bound

(Constant) Monthly Volume of Cash Transaction

2370.971 .550

1114.396 .101 .352

2.128 5.442

.035 .000

174.134 .351

4567.8 .749

a Dependent Variable: Pre ATM Average Cash Holding. Computed using SPSS

4.2.1.2.2 Regression of Post-ATM Average Cash Holdings on Monthly Volume of Cash Transactions Table 4.2.1.2.2, which shows the model summary indicates the R Square as 17.4%. This shows that the monthly volume of cash transactions only explains 17.4% of the variation in post-ATM cash holding, hence there are other variables that explain the variation other than the monthly volume of cash transactions. According to the table 4.2.1.2.3which shows the Analysis of Variance, the F- Calculated (39.477) is greater than the F-tabulated (3.89), this indicates that the relationship between post-ATM cash holding and the monthly volume of cash transactions is statistically significant, so as the monthly volume of cash transaction rises, the post-ATM cash holding also rises. Finally,

49

table 4.2.1.2.4 shows the regression coefficients, their standard error, t-statistics and their confidence interval. The regression indicates a positive relationship between post-ATM cash holding and the monthly volume of cash transactions, which conform to theory. Also a one- unit changes in the monthly volume of cash transactions on average will lead to 0.275 unit changes in the post-ATM cash holding, which ranges between 0.189 and 0.362 under a 95% confidence interval. This shows that the cash holdings fell drastically for the same volume of cash transactions after the acquiring of an ATM Card(s). Table 4.2.1.2.2 Coefficient of determination

Model 1

R .417(a)

R Square .174

Adjusted R Square .169

Std. Error of the Estimate 3459.20119

a Predictors: (Constant), Monthly Volume of Cash Transaction

Table 4.2.1.2.3 ANOVA Table

Model 1

Sum of Squares Regression Residual Total 472389039.111 2249621697.731 2722010736.842

Df 1 188 189

Mean Square 472389039.111 11966072.860

F 39.477

Sig. .000(a)

a Predictors: (Constant), Monthly Volume of Cash Transaction b Dependent Variable: Post ATM Average Cash Holding.

Computed using SPSS

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Table 4.2.1.2.4 Regression Coefficients

Model Unstandardized Coefficients B 1 (Constant) Monthly Volume of Cash Transaction 879.552 .275 Std. Error 492.932 .044 .417 Standardized Coefficients Beta 1.784 6.283 .076 .000 T Sig. 95% Confidence Interval for B Lower Bound -92.836 .189 Upper Bound 1851.940 .362

Dependent Variable: Post ATM Average Cash Holding .

Computed using SPSS

4.3

TESTING THE HYPOTHESIS

Null hypothesis,

H 0 : 1 = 0
H 1 : 1 0 :

Alternative Hypothesis, Level of Significance: 5%

Using the coefficients as derived in table 4.4.2.6,

ACH = 879.552+ 0.275 MVCT

Se = (492.932) t = (1.784) p = (0.076) r 2 = 0.174; F1,188 = 39.477 Where * denotes extremely small (0. 044) (6.283) (0.0000)* df = 210 (p value = 0.0000)*

From the above, it can be seen that the p-value, both the t-statistics and the fstatistics are extremely smaller than the traditional 0.05 level of significance. This shows that B1 (which shows the effect of ATMs on demand for money) is statistically

51

significant, and the probability of committing type1 error (rejecting an hypothesis that should be accepted) is Zero. Therefore, the null hypothesis that ATM does not have any significant effect on demand for money is rejected.

Conclusion: ATM has significant effect on the demand for money behaviour of students of the University of Ibadan.

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CHAPTER FIVE SUMMARY, CONCLUSION AND RECOMMENDATIONS This study was carried out with the main aim of examining the effect of ATMs on the demand for money of students. The targeted population of study was students of the University of Ibadan, Oyo state, Nigeria, with sample selected randomly using the stratified random sampling techniques. Two hundred and twelve (212) questionnaires were distributed among the respondents who were already divided into strata. After various findings and testing, the results can be explained below.

5.1

SUMMARY OF FINDINGS Based on the analysis of the data generated from the survey, there was a high rate

of responses, which was estimated to be precisely 100 percent. It was discovered that for every one female, there are approximately two males in the University of Ibadan, as the sample reveals 92 females and 120 males. Most of the undergraduates are basically within the age range of 21 to 25, as about 56 percent of the respondents fall within the age range. The highest number of the respondents was found to be in 400 levels representing 51.9 percent of the total respondents. Queen Idia and Queen Elizabeth Halls were found to be the most populous undergraduate halls in the university of Ibadan, having about 20.3 percent and 15.1 percent of the total undergraduates respectively compare with Sultan Bello and Tedder Halls which are least populated with about 7.5 percent of the undergraduates residing in each of the Halls. In carrying out this research work some vital research questions were generated, put forward and the answers analyzed using descriptive and inferential statistics like frequencies, percentages, chart, correlations and regression etc. the outcomes reveal that: About 95.8 percent of university of Ibadan undergraduates operate a bank account, and Guarantee Trust Bank (GTB) represents the most patronized bank despite its distance from the campus. Savings accounts was found to be most dominated as about

53

89.6 percent the students operate savings account, while 1.9 percent operate current account and about 4.2 percent operate both .Also, about 31.6 percent of the undergraduates operate more than one bank account with several banks, more so about 50 percent of the students indicate that their banks are not far from the campus, while about 45.8 percent recognized that their banks are far from the campus. The research question on the possession of ATM Cards reveals that about 89.6 percent of the respondents have at least one ATM Card mostly obtained around year 2008 and 2009, while some minute 10.4 percent have no ATM Card(s) at all. From the total numbers of respondents that have ATM Card(s), 32.1 percent use GTB ATM Cards, while the least used ATM Cards is that of First Inland Bank (FINBANK), while most students uses just one ATM Card, about 22.6 percent use more than one ATM Card. About 50.5 percent of those that use ATM Card(s) see its uses as convenient, 46.3 accepted that ATM use is very convenient, with just 3.2 percent seeing ATM use as lacking conveniences. Majority of the students, representing 71.1 percent perceive the ATMs around the campus as functional only sometimes, while about 52.6 percent of the respondents withdraw only from their banks ATMs to reduce withdrawal charges attached to withdrawing from other bank ATMs, about 25.8 percent withdraw from other bank ATMs irrespective of the charges since their banks are far from the campus. On the monthly volume of cash transactions, on the average about N9,452:83K worth of cash transactions is being conducted by each student on a monthly basis( and N133,379,431:30 worth of cash transactions is being conducted by all the students on a monthly basis ). For this volume of cash transactions, they hold about N7568:40 before the acquisition of ATM Card(s) and N3, 545.26 for the same volume of cash transactions after the possession of an ATM Card(s), the frequencies of withdrawal show that on average, the students withdraws around once a week and every two week. About 78.9 percent accepted that ATMs Card have reduced their cash holdings, of the 21 percent that strongly disagree, disagree and undecided, 45 percent indicated the reason to be due to

54

non-functional of most ATMs around the banking premises, while 55 percent due to personal reasons. The correlation coefficient between the pre-ATM cash holdings and the volume of transactions shows a positive relationship estimate of about 0.352, while that of the relationship between post ATM cash holdings and the volume of cash transaction also positive but more stronger. This shows that cash holdings increases as the volume of cash transactions increases. The regression coefficients show that the average cash holdings falls after the acquisition of ATM card(s) given the same volume of cash transactions. The Post-ATM cash holdings regression coefficient indicate that a one- unit changes in the monthly volume of cash transactions on average will lead to 0.275 unit changes in the post-ATM cash holdings, hypothesis testing was further used to test its significance and found to be highly significant. All these findings show that indicate that ATMs have a significant effect on the demand for money of students. Finally, the views of the respondents were also sampled on the Central Bank of Nigeria (CBN) directive that Banks should operate ATMs only in their branches, 35 percent of the respondents strongly disagreed and 31.4 percent disagreed, while 13 percent were undecided, 10.3 percent strongly agreed and 8.8 percent agreed. The majority that opposed the directive based their reasons on problems like the inconveniences, negative effect in time of emergencies, non-availability of bank branches and the extra transaction cost that will be involved on the part of the banks customers, while the minority that support the directive anchored their reasons on the prevalent ATMs Frauds and the non- functionality of some off premise ATMs all over the country. 5.2 CONCLUSION The result of this research coincide the quantity theory of money as suggested by Irving Fisher in his influential book that If people use charge accounts and credit cards to conduct their transactions and [they will] consequently use money less often when making purchases, [since] less money is required to conduct the transactions generated by

55

nominal income, velocity will increase. This theory holds among the population studied, and found to be significant. The study was able to discover that the factors that may hinder the validity of this theory among the students despite the spread of ATM machines around these campuses are; telecoms and network breakdown, lack of a dependable customers service centres, illiteracy among users. With regard to Power, most ATM machine in the campus runs on, UPSes and inverters to back up PHCN, in some extreme cases. More so, the rampant ATMs fraud even within the campus has discourage many students from even dealing with anything call ATM at all. All these factors affect negatively the effect of ATM on cash holdings as students are forced to withdraw and hold high amount of money, despite the fact there are close to ATMs around the campus premises. On a final note, it was gathered that if all these problems can be resolved, the effect of ATM on cash holdings of students will stimulate economic activities in the campus and make life easier for the students and everyone that resides around the campus environment. 5.3 RECOMMENDATIONS Automated teller machines are very important for daily transactions and are engines of growth in the financial sector indispensable in achieving a cashless society. They are time saving, reduce transaction costs and make life easier for students. The students are advised to use ATMs as it reduces the wastage in going to banks branches and queuing, while missing lectures and loss of cash through thefts in the halls of residents. During the course of the research, it was discovered that many of the ATMs on the campus are not really functional and this made the students to hold more cash in the hostels and travel several metres to banks branches, at times at the expense of their lectures. The school authority should eject banks ATMs that cannot be maintained from the campus and also allow Guaranty Trust Bank(GTB) to install its ATMs on the campus

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as it is being patronized by a lot of student who have incur costs going to the bank branches to withdraw. Finally, the monetary authority should be aware that bank branches are not evenly distributed, and off-premise ATMs have covered up for that shortcoming, apart from that, they have served several good purposes beyond the main reasons why they were installed in the first instance, removing them will drag the country backward and make life difficult for most banks customers, also ATM fraud should be curb and maintenances ensured instead of removing off-premise ATMs.

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References Agboola, A. (2006). Information and communication technology (ICT) in banking operations in Nigeria: An evaluation of recent experiences. Retrieved June 25, 2011, from http://unpan1.un.org/intradoc/groups/public /documents/AAPAM/ UNPAN026533 pdf Aladesulu. S.O (2007). Electronic banking in Nigeria and The automation of the Nigerian financial System: Issues and prospects. Retrieved June 25, 2011, from http:// www.cenbank.org/OUT/PUBLICATIONS/.../ARP-2007-PART%201.PDF ATM Community News (2011): First Bank launches Nigerias first Biometric ATM. Retrieved June 25, 2011, from http://www.photius.com/ countries/nigeria/ economy/ nigeria_economy_banking_finance_an~10016.html Card International (2010). Nigeria drives African card growth. Lagos; Financial News Publishing. Retrieved on 24th June, 2011 from http://www.vrl-financialnews.com/cardspayments/cards-international/ Central Bank of Nigeria (2003). Guidelines on Electronic Banking in Nigeria. Retrieved on 26th July, 2010 from http://www.cenbank.org/OUT/PUBLICATIONS /BSD /2003/E-BANKING.PDF Chang, M. K., & Cheung, W. (2001). Determinants of the intention to use Internet/www at work: A confirmatory study. Information and Management, 39(1), 1-14. Credit Management. (2005). Identity Theft Fears Rise. Credit Management, 16. Debit Cards and ATM Cards in Nigeria. Retrieved on 5th July, 2010 from http://debitandatmcards.blogspot.com/2007/07/atm-cards-in-nigeria.html Darch, U., & Caltabiano, N. J. (2004). Investigation of automatic teller machine banking in a sample of older adults. Australasian Journal on Ageing, 23(2), 100103. Di Angeli, A., Coventry, L., & Johnson, G. I. (2002). ATMs adoption in developing countries: Dj vu or not? Advanced Technology and Research.

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Donald Rutherford (2002). Routledge Dictionary of Economics. Second edition, published by Routledge, 11 New Fetter Lane, London. Economic impact report (2003- 2010), University of California Contributions to the Community. Retrieved June 24, 2011, from ww.ucsc.edu/about/economic_ impact.asp El-Haddan, A., & Almahmeed, M. (1992). ATM banking behaviour in Kuwait: A consumer survey. International Journal of Bank Marketing, 10(3), 250-232. Fanawopo, S. (2006). World without cash-Nigerias payment card grows significantly. Retrieved October 15, 2007, from http://www.sunneswsonline.com Fasan, R. (2007). Banks, customer relation and use of ATM cards. Business Day Newspapers. Retrieved February 28, 2008, from http://www.businessdayonline. com/ Gerrard, P., & Cunningham, J. B. (2003). The diffusion of internet banking among Singapore consumers. International Journal of Bank Marketing, 21(1), 16-28. Ghana Interbank Payment and Settlement Systems (2011). Students of the countrys tertiary institutions have embraced the use of e-zwich Automated Teller Machines (ATMs).Retrieved June 26 2011, from http://www.ghananewsagency .org /details/Economics/Campuses-record-high-volumes-of-e-zwich-ATMtransactions/?ci=3&ai=22937 Gujarati, D. N. & Sangeetha (2007). Basic Econometrics. 4th ed., New Delhi; Tata McGraw-Hill Publishing. Helmut Stix (2004), The Impact of ATM Transactions and Cashless Payments on Cash Demand in Austria. www.oenb/en/imgmop_20041_4_tcm 16-6055.pdf Hone, K. S., Graham, R., Maguire, M. C., Baber, C., & Johnson, G. I. (1998). Speech technology for automatic teller machines: An investigation of user attitude and performance. Ergonomics, 41(7) 962-981.

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Horton, R. P., Buck, T., Waterson, P. E., & Clegg, C. W. (2001). Explaining intranet use with the technology acceptance model. Journal of Information Technology, 16(4), 237-249. Intermarc Consulting Limited. (2007). Nigeria e-banking customer survey on cards, ATM and PoS. Retrieved October 12, 2008, from http://www.thenationonlineng.com/dynamicpage.asp?id=36290 Kennickell, A. B., & Kwast, M. L. (1997). Who uses electronic banking? Results from the 1995 survey of consumer finances. Presented at the Annual Meeting of the Western Economic Association, July, Seattle, Washington. Kolodinsky, J. M., Hogarth, J. M., & Hilgert, M. A. (2004). The adoption of electronic banking technologies by US consumers. International Journal of Bank Marketing, 22(4/5), 238- 259. Laderman, E. S. (1990). The public policy implications of state laws pertaining to automated teller machines. Federal Reserve Bank of San Francisco Economic Review, 1, 43-58. Lee, E. & Lee, J. (2000). Havent adopted electronic financial services yet? The acceptance and diffusion of electronic banking technologies. Financial Counselling and Planning, 11(1), 49-60. Leech, N., Barrett, K., & Morgan, G., A. (2005). SPSS for intermediate statistics: Use and interpretation (2nd Ed.). London: Lawrence Erlbaum Associates. Marshall, J., & Heslop, L. (1988). Technology acceptance in Canadian retail banking. International Journal of Bank Marketing, 6(4), 31-41. Melvin J. Richardson (2011). The Impact of the Automated Teller Machine | eHow.com. Retrieved June 24 2011, from http://www.ehow.com/about_ 5266629 _ impact-automated-teller-machine.html#ixzz1JRsBVNxY Omankhanlen, O. (2007). ATM: Rising threats and users dilemma. Retrieved January 16 2008, from http://www.tribune.com.ng Rogers, E. M. (1995). Diffusion of innovations (4th Ed.). The Free Press: New York.

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Rogers, E. M. (2003). Diffusion of innovations (5th Ed.). The Free Press: New York. Rogers, A., Fisk, A. D., Mead, S. E., Neff, W., & Cabrera, E. F. (1996). Training older adults to use automatic teller machines. Human Factors, 38. Retrieved October 18 2008 from http://www.questia.com Rugimbana, R. (1995). Predicting automated teller machine usage: The relative importance of perceptual and demographic factors. International Journal of Bank Marketing, 13(4), 26-32. Sheth, J. N. (1981). Psychology of innovation resistance: The less developed concept (LDC) in diffusion research. Research in Marketing, 4, 273-282. Swinyard, W. R., & Ghee, L. (1987). Adoption patterns of new banking technology in Southeast Asia. International Journal of Bank Marketing, 5(4), 35-48. Tan, M., & Teo, T. S. H. (2000). Factors influencing the adoption of internet banking. Journal of the Association for Information Systems, 1(1) 1-42. Taube, P. M. (1988). The influence of selected factors on the frequency of ATM usage. Journal of Retail Banking, 10(1), 47-52. Ugwu, E. (2008). CBN, banks to tackle ATMs hitches. Retrieved April 18, 2008, from http://www.guardiannewsngr.com

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RESEARCH QUESTIONNAIRE DEPARTMENT OF ECONOMICS FACULTY OF THE SOCIAL SCIENCES UNIVERSITY OF IBADAN Dear Respondent, This questionnaire is designed in order to obtain information on the effect of automated teller machines (ATMs) on demand for money behaviour of students. Your sincere completion of this questionnaire will be highly appreciated. All information provided is strictly for research (academic) purposes and shall be treated with utmost confidentiality. Please tick ( ) as appropriate. SECTION A: GENERAL INFORMATION (1) Gender: Male ( ) Female ( ). (2) Age: 16-20( ). 21-25 ( ). 26-Above ( ). (3) (5) (6) (7) (8) (9) (10) Faculty: ________________ (4) Department _______________ Level of Study: 100( ), 200( ), 300( ), 400( ), 500( ), 600( )

Hall of Residence: _________________________ Do you have a bank account? Yes ( ) No ( ), If yes, mention the bank(s) _______________________________ Which account do you operate? Is your bank far from the campus? Savings ( ) Current ( ) Yes ( ) No ( )

SECTION B: DIFFUSION OF ATM CARDS AMONG STUDENTS (11) (12) Do you have an ATM Card? Yes ( ), No ( ). If yes, for which bank? GTB( ), First Bank( ), FCMB( ), Oceanic( ), Others Mention_______

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(13) (14) (15)

If many, why do you carry many ATM Cards? ______ When did you obtained your ATM Card _________ How convenient is your experience with the use of ATMs. Very Convenient ( ), Moderately Convenient ( ), Not Convenient ( )

(16)

How Functional are the ATMs within and around the Campus premises. Always Functional ( ), Sometimes Functional ( ), Never Functional ( )

(17)

Which ATM do you use often? Your Bank ATMs( );Other Bank ATMs( ); Both ( ).

SECTION C: CASH HOLDING PATTERN OF STUDENTS VIS--VIS ATM (18) (19) How much do you spend on the average in a month? _____________ How much cash do you hold on the average in a month before obtaining your ATM Card(s) ? _______________

(20)How much cash do you hold now that you have ATM card(s)?__________ (21) How often do you withdraw cash with your ATM card(s)?

Several times a Week ( ), Once a Week ( ), Every two Weeks ( ), Once a Month ( ) (22) Do you agree that that the use of ATM cards has assisted in reducing your cash holding behaviour?

Strongly Agree ( ), Agree ( ), Undecided ( ), Disagree ( ), Strongly Agree ( ). (23) If Undecided, disagree and strongly disagree, will you attribute this to the nonfunctionality of ATMs within and around the bank? Yes ( ), No () Do you support CBN directives that Banks should only operate ATMs in their branches? Strongly Agree ( ), Agree ( ), Undecided ( ), Disagree ( ), Strongly Agree (). (25) Why?__________________________________________________.

(24)

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ABOUT THE AUTHOR

BODUNRIN, Olalekan Samuel obtained a professional diploma in statistics (PDS) and B.Sc. Economics from the prestigious premier University of Ibadan, Ibadan, Oyo State, Nigeria. His area of focus presently is Development Economics, Econometrics, Economics Mathematics, International Economics, Monetary Economics, Socioeconomic survey and Data Analysis. He can be contacted through the following media. Phone: +2348039786891 E-mail: donbodinson@gmail.com bodinson2000@yahoo.com