IDEAS home Printed from https://ideas.repec.org/a/mfa/journl/v30y2022i2p63-89.html
   My bibliography  Save this article

Digital Cashless Payments and Economic Growth: Evidence from CPMI Countries

Author

Listed:
  • Yi-Xun Pang

    (School of Economics and Management, Xiamen University Malaysia, Malaysia.)

  • Sin-Huei Ng

    (School of Economics and Management, Xiamen University Malaysia, Malaysia.)

  • Wei-Theng Lau

    (School of Business and Economics, Universiti Putra Malaysia, Malaysia.)

Abstract

Research Question: This paper aims to investigate the relationships between digital payments and economic growth in 27 CPMI countries. Besides, it also studies the comparison of the impacts of digital payments between developed and developing countries. Motivation: Digital cashless payments have been widely discussed in recent years and the penetration of cashless payments around the globe is rising exponentially throughout the decade. Several studies have found that cashless payments have a positive impact on economic growth. However, the existing studies are mainly focusing on the European countries. Committee on Payments and Market Infrastructures (CPMI) is a new area to be explored because it consists of some countries that are seldom being investigated in the related fields previously. Idea: Analysis consists of GDP growth as the variable of interest and transaction volumes of debit cards, credit cards and e-money payments as the explanatory variables. Several control variables are used to capture other effects in the model. Data: Data are collected from various sources of database for the period of 2013-2019 covering a total of 27 countries/regions which consist of 18 developed countries and 9 developing countries in the CPMI membership. Method/Tools: This paper employs a fixed effect panel data model to analyse the relationship between digital payments and economic growth in (1) all CPMI countries, (2) developed CPMI countries, (3) developing CPMI countries. A comparative analysis is also performed between the developed and developing CPMI countries. Findings: Our findings are in line with the expectation, where all three digital payments are positively correlated to economic growth. However, only the e-money payment is statistically significant to the economic growth. Besides, the findings also indicate that the effects of digital payments on the developed economies are greater than the developing economies. Contributions: CPMI members have put in considerable efforts in facilitating cashless payments. The analysis of the relationship between digital cashless payments and economic growth in CPMI countries provides a review on the effectiveness of the initiatives taken by the member countries. Our findings are expected to offer some new insights related to digital cashless payments and contribute to the modern financial sector.

Suggested Citation

  • Yi-Xun Pang & Sin-Huei Ng & Wei-Theng Lau, 2022. "Digital Cashless Payments and Economic Growth: Evidence from CPMI Countries," Capital Markets Review, Malaysian Finance Association, vol. 30(2), pages 63-89.
    • Handle: RePEc:mfa:journl:v:30:y:2022:i:2:p:63-89
    as

    Download full text from publisher

    File URL: https://www.mfa.com.my/wp-content/uploads/2022/10/v30_i2_a4_pg63-89.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. repec:zbw:bofrdp:2012_019 is not listed on IDEAS
    2. Donghyun Park & Kwanho Shin, 2017. "Economic Growth, Financial Development, and Income Inequality," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(12), pages 2794-2825, December.
    3. Ethan Ligon & Badal Malick & Ketki Sheth & Carly Trachtman, 2019. "What explains low adoption of digital payment technologies? Evidence from small-scale merchants in Jaipur, India," PLOS ONE, Public Library of Science, vol. 14(7), pages 1-22, July.
    4. Donghyun Park, 2015. "Economic Growth, Financial Development and Income Inequality," Working Papers id:7247, eSocialSciences.
    5. Seema Wati Narayan, 2019. "Does Fintech Matter For Indonesia’S Economic Growth?," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 22(4), pages 437-456, December.
    6. Keele, Luke & Kelly, Nathan J., 2006. "Dynamic Models for Dynamic Theories: The Ins and Outs of Lagged Dependent Variables," Political Analysis, Cambridge University Press, vol. 14(2), pages 186-205, April.
    7. Hasan, Iftekhar & De Renzis, Tania & Schmiedel, Heiko, 2012. "Retail payments and economic growth," Bank of Finland Research Discussion Papers 19/2012, Bank of Finland.
    8. Hasan, Iftekhar & De Renzis, Tania & Schmiedel, Heiko, 2012. "Retail payments and economic growth," Research Discussion Papers 19/2012, Bank of Finland.
    9. Dominik Enste & Friedrich Schneider, 2002. "Hiding in the Shadows; The Growth of the Underground Economy," IMF Economic Issues 30, International Monetary Fund.
    10. Hock-Han Tee & Hway-Boon Ong, 2016. "Cashless payment and economic growth," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 2(1), pages 1-9, December.
    11. J van Greunen & A Heymans & C van Heerden & G van Vuuren, 2014. "The Prominence of Stationarity in Time Series Forecasting," Studies in Economics and Econometrics, Taylor & Francis Journals, vol. 38(1), pages 1-16, April.
    12. Mr. Friedrich Schneider & Dominik Enste, 2002. "Hiding in the Shadows: The Growth of the Underground Economy," IMF Economic Issues 2002/001, International Monetary Fund.
    13. Marco Jacopo Lombardi & Madhusudan Mohanty & Ilhyock Shim, 2017. "The real effects of household debt in the short and long run," BIS Working Papers 607, Bank for International Settlements.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Evelina Maria Oliveira Coutinho & Manuel Au-Yong-Oliveira, 2024. "Innovation’s Performance: A Transnational Analysis Based on the Global Innovation Index," Administrative Sciences, MDPI, vol. 14(2), pages 1-16, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vu, Khuong & Rohman, Ibrahim Kholilul & Bohlin, Erik, 2024. "Promoting the adoption of digital technology: Strategic policy insights from a network effects model," Telecommunications Policy, Elsevier, vol. 48(10).
    2. Massomeh Hajilee & Farhang Niroomand & Linda A. Hayes, 2023. "The relationship between interest rate volatility and the shadow economy in OECD countries: An asymmetric analysis," Australian Economic Papers, Wiley Blackwell, vol. 62(3), pages 539-566, September.
    3. Mara, Eugenia-Ramona, 2011. "Causes and consequences of underground economy," MPRA Paper 36438, University Library of Munich, Germany, revised 2011.
    4. Asif Sajid & Amjad Ali, 2018. "Inclusive Growth and Macroeconomic Situations in South Asia: An Empirical Analysis," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 7(3), pages 97-109, September.
    5. Monica Violeta Achim & Sorin Nicolae Borlea & Lucian Vasile Găban & Alin Adrian Mihăilă, 2019. "The Shadow Economy and Culture: Evidence in European Countries," Eastern European Economics, Taylor & Francis Journals, vol. 57(5), pages 352-374, September.
    6. Pasovic Edin & Efendic Adnan S., 2018. "Informal Economy in Bosnia and Herzegovina – An Empirical Investigation," South East European Journal of Economics and Business, Sciendo, vol. 13(2), pages 112-125, December.
    7. Feige, Edgar L., 2015. "Reflections on the meaning and measurement of Unobserved Economies: What do we really know about the “Shadow Economy”?," MPRA Paper 68466, University Library of Munich, Germany.
    8. Elijah, Obayelu Abiodun & Uffort, Larry, 2007. "Comparative Analysis of the Relationship Between Poverty and Underground economy in the Highly developed, Transition and Developing Countries," MPRA Paper 2054, University Library of Munich, Germany.
    9. Ibragimov Marat & Jovlon Karimov & Elena Permyakova, 2013. "Unemployment and output dynamics in CIS countries: Okun's law revisited," EERC Working Paper Series 13/04e, EERC Research Network, Russia and CIS.
    10. Fredström, Ashkan & Peltonen, Juhana & Wincent, Joakim, 2021. "A country-level institutional perspective on entrepreneurship productivity: The effects of informal economy and regulation," Journal of Business Venturing, Elsevier, vol. 36(5).
    11. Sintayehu Tulu Wondimu & Mathewos Woldemariam Birru, 2020. "Determinants Of Informal Economy Estimation In Ethiopia: Multiple-Indicators, Multiple-Causes (Mimic) Approach," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 9(2), pages 65-86.
    12. Larissa Batrancea & Anca Nichita & Ioan Batrancea & Lucian Gaban, 2018. "The Strenght of the Relationship Between Shadow Economy and Corruption: Evidence from a Worldwide Country-Sample," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 138(3), pages 1119-1143, August.
    13. Seven, Unal & Coskun, Yener, 2016. "Does financial development reduce income inequality and poverty? Evidence from emerging countries," Emerging Markets Review, Elsevier, vol. 26(C), pages 34-63.
    14. Shamaila Butt & Faisal FAISAL & Muhammad Ali Chohan & Adnan Ali & Suresh Ramakrishnan, 2024. "Do Shadow Economy and Institutions Lessen the Environmental Pollution? Evidence from Panel of ASEAN-9 Economies," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 4800-4828, March.
    15. Teck-Lee Wong & Wee-Yeap Lau & Tien-Ming Yip, 2020. "Cashless Payments and Economic Growth: Evidence from Selected OECD Countries," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 9(special i), pages 189-213.
    16. Mara, Eugenia Ramona, 2011. "The underground economy in Romania," MPRA Paper 36440, University Library of Munich, Germany, revised 2011.
    17. Luca Baldo & Elisa Bonifacio & Marco Brandi & Michelina Lo Russo & Gianluca Maddaloni & Andrea Nobili & Giorgia Rocco & Gabriele Sene & Massimo Valentini, 2021. "Inside the black box: tools for understanding cash circulation," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 7, Bank of Italy, Directorate General for Markets and Payment System.
    18. Ogunyemi, Oluwole Ibikunle & Adedokun, Adebayo Sunday, 2014. "Towards West-Africa regional economic integration: Formalizing the informal sector," Conference papers 332450, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    19. Umoru Abdulazeez, 2024. "Globalisation, Income Inequality and Economic Growth in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(7), pages 3004-3014, July.
    20. Thierno Thioune, 2017. "Financial Instability and Inequality Dynamics in the WAEMU," Econometric Research in Finance, SGH Warsaw School of Economics, Collegium of Economic Analysis, vol. 2(1), pages 43-62, June.

    More about this item

    Keywords

    Digital payments; CPMI; GDP; developed economies; developing economies.;
    All these keywords.

    JEL classification:

    • G50 - Financial Economics - - Household Finance - - - General
    • O39 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mfa:journl:v:30:y:2022:i:2:p:63-89. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Capital Market Review (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.