A review of Turava Sofiko on article ‘Analysis the use of electronic money in Indonesia’ by Mifta Qoirun Nisa Arifin, Shanty Oktavilia, Development Economics Department, Economics Faculty, Universitas Negeri Semarang
The paper provides an analysis of effect of macro instruments such as Gross Domestic Product, money supply (M1), inflation, and BI Rate on e-money transactions. The relevance of the research is dictated by the innovative nature of the new payment method. The advantages of using electronic means of payment in comparison with cash increase the level of their use, but do not significantly reduce the amount of money in circulation. It can be explained by the fact that there is a high number of people in Indonesia who depend on cash transactions. The authors of the research use quantitative methods with time-series data from January 2009 to December 2019, and the Error Correction Model Engle-Granger (ECM) methodology to study the effect of macro variables on digital transaction in the long and short, as well as analyzing the substitution of e-money to a currency based on regression elasticity result. The regression used logarithmic form that aims to convert data that were initially non-stationary into normally distributed data. The dependent variable in this study is the digital transaction values that stated in million rupiahs. Variable GDP, Inflation, BI Rate, and money supply as the independent variables.
This article, in addition to analyzing the impact of macro variables on the use of electronic money, provides interesting statistical information on the development of the use of e-money in Indonesia, as well as on the correlation of this variable with other macro variables. It is easy to follow authors’ idea and the structure is good. The main results are summarized in tables with short-run and long-run regression. Special attention is paid to reference to the literature that suggests the impact of macroeconomic variables on the use of electronic money.
The results of the study showed, that The GDP variable in a short-run has an insignificant negative effect, while in a long-run has a positive effect, it is also significant on e-money transaction in Indonesia. The result is obvious, because the more people use electronic money in a country, the more they have enough income and they are open to technology. The M1 variable in the short-run has an insignificant negative effect, while in the long-run, it has a significant negative effect on e-money in Indonesia. This result is explained by the fact that despite the fact that people in Indonesia have started using electronic money for payments, this does not happen on a daily basis, as in the case of cash. At the same time, the introduction of electronic money in the long term can have a significant negative impact on the turnover of the money supply and lead to its reduction. Inflation variables in both the short and long-run have an insignificant positive effect on e-money in Indonesia. Based on the long and short-run coefficients, although inflation is occurring, people still transacting using e-money. The number of consumption activities carried out by public are not disrupted because inflation is still considered low, and there is urge to fulfill their daily needs although more monetary nominal is required. The variable BI rate in the short and long-run have an insignificant negative effect on e-money in Indonesia. Despite the statement from Keynes ' theory that the demand for money has a negative relation with interest rates, according to the concept of electronic money is only limited as direct payment media and not for investment, so that it have no relation with interest rates. The authors conclude that electronic payments have a positive impact, especially in developing countries like Indonesia, which means that electronic money transactions have the potential to grow in line with the macro variables.
Source: Mifta Qoirun Nisa Arifin and Shanty Oktavilia “Analysis The Use of Electronic Money in Indonesia” (November 2020).
Published by Economics Development Analysis Journal
URL: https://journal.unnes.ac.id/sju/index.php/edaj/article/view/39934