Digital Transformation and Internal Control Effectiveness of Listed Deposit Money Banks in Nigeria

The effectiveness of internal control systems is critical for the stability and sustainability of deposit money banks, yet many institutions in Nigeria continue to face challenges in monitoring, compliance, and operational efficiency. Despite growing adoption of digital technologies, limited empirical evidence exists on how digital transformation influences internal control effectiveness within Nigerian banks. This study addresses this research gap by examining the effect of digital transformation (DT) on internal control effectiveness (ICE) in 14 publicly listed deposit money banks in Nigeria over the period 2015–2024, while controlling for organizational size (OS), industry type (IND), and management support (MS). Using a panel regression framework with a Random Effects Model, complemented by descriptive statistics, correlation analysis, and rigorous diagnostic tests (VIF, Breusch-Pagan, Durbin-Watson, Jarque-Bera), the study ensures robustness and reliability of results. Findings reveal that digital transformation significantly improves internal control effectiveness (β = 0.52, p < 0.001), while organizational size and management support also contribute positively. The results highlight that technology adoption, resource availability, and leadership commitment collectively strengthen bank controls. Limitations include the focus on listed banks, which may limit generalizability to non-listed institutions. Practically, the study informs bank executives and regulators on leveraging digital initiatives and management engagement to enhance control systems. The study is original in its integrated assessment of digital transformation, organizational factors, and management support on internal control effectiveness in the Nigerian banking sector.