EFFECTS OF PUBLIC SECTOR FINANCIAL MANAGEMENT REFORMS ON FINANCIAL PERFORMANCE OF DEVELOPMENT FINANCE INSTITUTIONS IN NIGERIA

This study investigates the impact of public sector financial management reforms, specifically the Treasury Single Account (TSA) and Electronic Payment System (EPS), on the financial performance of Development Finance Institutions (DFIs) in Nigeria. With the introduction of TSA and EPS, Nigeria aimed to address longstanding issues such as revenue leakages, corruption, and inefficiencies in the financial management processes of public institutions. This research employs an ex-post-facto research design, analysing data from six Nigerian DFIs—Bank of Industry (BOI), Federal Mortgage Bank of Nigeria (FMBN), Bank of Agriculture (BOA), Nigeria Export-Import Bank (NEXIM), The Infrastructure Bank, and Development Bank of Nigeria—from 2007 to 2022. By utilizing purposive sampling and panel regression techniques with E-Views 12 software, the study evaluates the financial performance of DFIs before and after the implementation of TSA and EPS. The findings show that traditional methods of revenue generation and payment processing had limited impact on the financial performance of DFIs. However, the implementation of TSA and EPS significantly enhanced financial stability, operational efficiency, and liquidity. Specifically, the study reveals that post-TSA revenue generation positively impacted the liquidity of DFIs, while EPS improved the efficiency and security of financial transactions, leading to a notable increase in liquidity. These results underscore the critical role of TSA and EPS in enhancing transparency, financial accountability, and operational effectiveness within the public sector. Based on the findings, the study recommends enhancing the integration of TSA with other financial systems for better fund management, as well as strengthening the security and transparency of EPS to further improve liquidity and operational capacity. The research contributes to the literature by providing empirical evidence of the positive effects of these reforms on DFIs and offers practical recommendations for improving financial management in the Nigerian public sector.