Roles of Digital Financial Strength in Enhancing Nigeria’s Post-Pandemic Economic Resilience (2015-2024): An Ardl Analysis with Structural Breaks

Abstract

This study rigorously investigates the structural impact of Digital Financial Strength (DFS) on Economic Resilience (ER) in Nigeria across the highly volatile period of 2015 to 2024. Addressing the methodological challenge of multiple regime shifts (e.g., 2016 oil shock, 2020 pandemic), the research employs the Autoregressive Distributed Lag (ARDL) model, incorporating a Zivot-Andrews structural break test and a 2020:Q2 shock dummy. The ARDL Bounds Test confirms a stable long-run co-integrating relationship. The estimated long-run elasticity of DFS on ER is highly significant and positive at 0.85, suggesting the massive expansion in the real value of digital transactions has created a structural, shock-mitigating component within the Nigerian economy. This finding argues that the financial ecosystem has achieved the critical mass necessary to generate significant resilience benefits, effectively countering arguments of "digital prematurity”. In contrast, Inflation (INF) poses the greatest systemic drag, with a coefficient of -0.60. Analysis of the short-run dynamics reveals an exceptionally rapid speed of adjustment, with the Error Correction Term (ECMt-1) coefficient at -0.75. This implies 75% of any disequilibrium is corrected and restored to the long-run path within one quarter, a mechanism facilitated by digital payment systems. The 2020:Q2 dummy confirms an acute, immediate negative shock (-1.20), from which the high adjustment speed enabled a swift recovery. The author recommends that the Central Bank of Nigeria should prioritise structural inflation control as a cornerstone of macroeconomic stability also policy efforts must urgently accelerate the deepening of Nigeria’s digital infrastructure and regulatory framework.