Artificial Intelligence Disclosure and Financial Performance in the Banking Sector

Abstract

The study examined the effect of artificial intelligence (AI) disclosure on the financial performance of banks in Nigeria from 2020 to 2024. Specifically, the study sought to: determine the effect of AI applications disclosures on financial performance, investigate the effect of AI products disclosures on financial performance, and examine the effect of AI services disclosures on financial performance within the Nigerian banking sector. A review of relevant conceptual, theoretical, and empirical literature was conducted, and the study was anchored on agency theory. The research adopted an ex post facto design. The population comprised all listed commercial banks in Nigeria, from which a sample of six banks was selected using a convenience sampling technique. Data were sourced from the annual reports of the sampled banks. Descriptive statistics, correlation analysis, and multiple regression analysis were employed to analyze the data. The findings indicate that AI applications disclosure had a significant positive effect on the financial performance of banks. Similarly, AI products disclosure also exhibited a significant positive effect on financial performance. However, AI services disclosure was found to have no significant effect on financial performance. The study concludes that overall, AI disclosure positively influences the financial performance of banks in Nigeria. It recommends that policies promoting the disclosure of AI applications and products such as mandatory reporting on AI initiatives should be encouraged, as these disclosures have been shown to enhance banks’ financial performance.