Payment Systems Innovations and Financial Intermediation: The Case of Indonesia
Lubis, Alexander; Alexiou, Constantinos; Nellis, Joseph G. | July 2019
Abstract
This paper explores the relationship between innovations in payment systems and financial intermediation. By focusing on excess reserves and the currency demand, we provide evidence on the extant transmission mechanism. In this direction, we applied the generalized method of moments (GMM) and vector error correction model (VECM) techniques to a dataset collated for Indonesia. We found that the currency demand affects financial intermediation whilst observing a limited role of excess reserves in affecting financial intermediation. We discovered that credit card payments have a statistically significant effect on the currency demand, whereas debit card payments only influence financial intermediation in the long run. In addition, the real-time gross settlement (RTGS) exerts upward pressure on excess reserves. The findings are of great importance, as they provide support for policies that favor payment migration to an electronic platform, particularly that of card-based payment systems.
Citation
Lubis, Alexander; Alexiou, Constantinos; Nellis, Joseph G.. 2019. Payment Systems Innovations and Financial Intermediation: The Case of Indonesia. © Asian Development Bank Institute. http://hdl.handle.net/11540/10842.Keywords
Public Financial Management
Financial System
Financial Statistics
Financial Stability
Financial Management System
Financial Restructuring
Capital Market Development
Market Development
Economics
Erosion
International Economics
Macroeconomic
Macroeconomic Analysis
Performance Evaluation
Impact Evaluation
Foreign and Domestic Financing
Foreign Direct Investment
Pension Funds
Mutual Funds
Social Equity
Financial Aspects
Fiscal Policy
International Financial Market
Multilateral Financial Institutions
Economic Recession
Market
Crisis
Economic indicators
Growth models
Gross domestic product
Macroeconomics
Economic forecast
Business Financing
Investment Requirements
Labor policy
Manpower policy
Business recessions
Multilateral development banks
Regulatory reform
Capital
Exports
Economic development projects
Economic policy
Economic forecasting
Investment Requirements
Banks
International banks and banking
Capital movements
Central banks and banking
Bills of exchange
Swaps
Banks and banking
Financial crisis
Credit control
Credit allocation
Capital market
International liquidity
Liquidity
Exchange rate
Pension plans
Individual retirement accounts
Employee pension trusts
Investment management
Investments
Multiemployer pension plans
Keogh plans
Individual retirement accounts
Pension plans
Employee pension trusts
Pension trusts
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