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The Role of Digital Payments in Driving Regional Economic Growth: A Panel Data Analysis with Structural Break

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  • Wishnu Badrawani
  • Citra Amanda
  • Novi Maryaningsih
  • Carla Sheila Wulandari

Abstract

Using a panel payment system dataset of thirty-three provinces in Indonesia, we examine the impact of digital payment on the regional economy, considering structural breaks induced by unprecedented events and policies. Digital payments were determined to significantly affect regional income and consumption before and after the identified breakpoint, with the impact greater following the break. Employing a novel method for structural break analysis within interactive effects panel data, we demonstrate that the break in retail payment models is due to COVID-19, and the break in the wholesale payment model is associated with the central bank's payment system policy.

Suggested Citation

  • Wishnu Badrawani & Citra Amanda & Novi Maryaningsih & Carla Sheila Wulandari, 2025. "The Role of Digital Payments in Driving Regional Economic Growth: A Panel Data Analysis with Structural Break," Papers 2508.02119, arXiv.org.
    • Handle: RePEc:arx:papers:2508.02119
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    1. Susana Martín Belmonte & Jordi Puig & Mercè Roca & Marta Segura, 2021. "Crisis Mitigation through Cash Assistance to Increase Local Consumption Levels—A Case Study of a Bimonetary System in Barcelona, Spain," JRFM, MDPI, vol. 14(9), pages 1-17, September.
    2. Rui Zhou, 2022. "Sustainable Economic Development, Digital Payment, and Consumer Demand: Evidence from China," IJERPH, MDPI, vol. 19(14), pages 1-20, July.
    3. Jan Ditzen, 2021. "Estimating long-run effects and the exponent of cross-sectional dependence: An update to xtdcce2," Stata Journal, StataCorp LLC, vol. 21(3), pages 687-707, September.
    4. Biswajit Patra & Narayan Sethi, 2024. "Does digital payment induce economic growth in emerging economies? The mediating role of institutional quality, consumption expenditure, and bank credit," Information Technology for Development, Taylor & Francis Journals, vol. 30(1), pages 57-75, January.
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