Digital and electronic transactions against velocity of money

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Abstract

The payment system accumulates through an interbank fund transfer system, banking procedures, and a set of instruments that guarantee the circulation of money (Hancock & Humphrey, 1997). The theory of money expressed by Fisher is very striking and different from Marx’s. Marx only emphasizes monetary developments as contemporary capitalism. However, Fisher on the form of money and the function of money in a certain amount (as cited in Ivanova, 2020). The flow of electronic and digital transactions has continued to innovate over the past decade. An important point of this research is to identify electronic transactions and digital transactions against the velocity of money (VoM) in Indonesia. Fisher’s theory of money is applied to this study. Through a quantitative approach, time-series data for 2009–2019 was collected from the Bank of Indonesia and BPS-Indonesia. Multiple linear regression analysis is useful in interpreting the data. As a result, we find electronic transactions measured by credit cards appear to have a negative effect on VoM, but the impact is significant. Meanwhile, debit cards actually have a positive and significant effect on the value of VoM. Interestingly, other empirical results explore the relationship of digital transactions represented by e-money with VoM, where the effect is negative and insignificant. This finding is also very relevant to banking efforts to harmonize and adopt advanced technology in the financial system.

Keywords: Credit Card, Debit Card, E-Money, VoM, Time-Series, Indonesia

Authors’ individual contribution: Conceptualization — J.R.; Writing — Review & Editing — J.R.; Software — E.R.; Formal Analysis — E.R.; Investigation — E.R.; Data Curation — E.R.; Methodology — E.R.; Visualization — R.R.; Resources — R.B.S.; Supervision — R.B.S.; Writing — Original Draft — J.R., E.R., R.B.S., and R.R.; Project Administration — J.R., E.R., R.B.S., and R.R.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

Acknowledgements: An internal grant (Decree of the Chancellor of Mulawarman University No. 2369/UN17/HK/2021) sponsored the study in 2021. We would like to thank reviewer Program of Doctoral Study in Economics, Faculty of Economics and Business, Mulawarman University, Indonesia.

JEL Classification: D23, F38, E5, C22

Received: 12.09.2021
Accepted: 15.12.2021
Published online: 17.12.2021

How to cite this paper: Roy, J., Rochaida, E., Suharto, R. B., & Rizkiawan, R. (2021). Digital and electronic transactions against velocity of money [Special issue]. Corporate Governance and Organizational Behavior Review, 5(2), 145–155. https://doi.org/10.22495/cgobrv5i2sip3