Abstract
Abstract This study investigates the relationship between cashless payments and economic growth in selected OECD countries. Using annual data from 2007 to 2016, our results indicate that: Firstly, cashless payment stimulates economic growth in OECD countries. Specifically, the growth-enhancing effect is found in debit card payment while credit card, e-money and cheque payment have no impact on economic growth; Secondly, the positive relationship between economic growth and debit card payment is robust after controlling for the effect of endogeneity, omitted variable bias and outliers. Based on the findings, this study offers some imperative policy recommendations.
Highlights
World Payment Report (2015) reported that cashless transactions increased by 7.6% from 2012 and achieved 358 Billion in U.S Dollar in 2013
This study investigates the relationship between cashless payments and economic growth in selected OECD countries
The growth-enhancing effect is found in debit card payment while credit card, e-money and cheque payment have no impact on economic growth; Secondly, the positive relationship between economic growth and debit card payment is robust after controlling for the effect of endogeneity, omitted variable bias and outliers
Summary
World Payment Report (2015) reported that cashless transactions increased by 7.6% from 2012 and achieved 358 Billion in U.S Dollar in 2013. Study by European Central Bank (ECB) shows that cashless payments are growing gradually in the European Union. There was an increase of 6.0 and 2.8 percent in 2013 and 2014, respectively for the total number of cashless payments in the European Union. From 2000 to 2014, there was an exponential growth on card payments and Journal of Central Banking Theory and Practice · Special Issue Proceedings from 13th BMEB International Conference in Bali: 190 Maintaining Stability, Strengthening Momentum of Growth Amidst High Uncertainties this implies that the substitution of cash has become more and more popular. Cashless payments are found to have a positive influence on economic growth (Hasan et al, 2012; Oyewole et al, 2012; Zandi et al, 2013; Tee and Ong, 2016; Zandi et al, 2016)
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