Demand For Money In Indonesia Research Articles

The Impact of Digital Currency on Demand for Money: Evidence from Indonesia

The purpose of this study is to examine the impact of digital currency transaction variables on the demand for money in Indonesia. The data used are data on the volume of mobile banking transactions, internet banking, interest rates, the level of currency fluctuations, and inflation on the demand for money for the period 2013 to 2022. Data analysis uses Autoregressive Distributed Lag (ARDL) cointegration method. The results of regression testing can be concluded that the long-term relationship is valid. In addition, using CUSUM and CUSUMQ from the quadratic test, the demand for money in Indonesia is relatively stable using the narrow definition of money, it implies that there haven't been significant and persistent shifts in either the mean or the variance of the narrow money supply. A stable demand for money suggests that the economic agents in Indonesia, such as households and businesses, are not undergoing substantial changes in their preferences or behaviors related to holding money. This stability can have implications for monetary policy and economic planning, as it indicates a certain level of predictability in the demand for money. However, it's crucial to keep in mind that economic conditions and factors influencing the demand for money can change over time. Therefore, continuous monitoring and periodic reassessment of the stability of the demand for money are necessary for accurate economic analysis and policy formulation.

ANALYSIS OF FACTORS AFFECTING THE DEMAND FOR MONEY IN INDONESIA

Demand for money is defined as people's tendency to save money for various purposes, such as transactions, anticipation, and speculation. Many factors related to economic, social, political and psychological conditions influence the demand for money. This research aims to evaluate the impact of various variables on money demand in Indonesia from 2018 to 2023. This research uses an Error Correction Model (ECM), which can measure short-term and long-term correlations between the variables studied. The money supply (M2) is the dependent variable of this research, and the independent variables are interest rates, inflation and the US dollar exchange rate against the rupiah. The results show that except for inflation, all independent variables influence money demand significantly in the long run. In the short term, only the rupiah exchange rate has a significant influence on the demand for money.

Money Demand Analysis through Business Cycle in Indonesia

There is still debate about the role of monetary aggregates (money demand) and their nature in the domestic economy, whether there is a direct affect and indirect affect. After the 2008 crisis, monetary aggregates became a monetary policy tool that played an important role in maintaining domestic economic stability. This study aims to examine macroeconomic variables on the demand for money in Indonesia from 2000Q1-2021Q4 using the VECM approach. The business cycle is used as a proxy for the income variable with the Hodrick-Prescott Filter method on the GDP variable. The results show that income has a high degree of variability in the demand for money and there is a sensitivity in the response of the demand for money to fluctuations in domestic interest rates. The implication of this research the application of domestic interest rates at the lowest level can encourage income which can increase the demand for money in Indonesia.

The Flow of Money Demand in Indonesia: What Drives it?

Indonesia’s economy is experiencing a contemporary phase marked by decades of financial turmoil. Fluctuations in money demand are inseparable from the responsibilities of Bank Indonesia, which is the holder of rules and regulations and has full control of tracking the effects of financial flows. In reality, the imbalance between the demand for money and the supply of money with limited stock and capacity has an impact on macroeconomic turmoil. The orientation of this study follows up on the causality between gross domestic product (GDP), deposit interest rates and the rupiah exchange rate against the demand for money in Indonesia. The quantitative research approach supports the objective. Time series data from 2006–2020 was obtained from the Central Statistics Agency of Indonesia and Bank Indonesia. The data was analyzed using the error correction model (ECM) through EViews 9.0. The indications are that in the short and long terms, GDP and the rupiah exchange rate have a positive effect and increase the demand for money. An increase in deposit rates has a negative effect on the demand for money. Holistic recommendations concentrate on parallel and collaborative monetary instruments between executive parties, including banking. Also, it is necessary to control and visualize policies that are more comprehensive and consider holistic issues related to the aggressiveness of money circulation, which has the potential to disrupt the macroeconomy.

Money Demand in Indonesia: Does Economic Uncertainty Matter?

Since the global financial crisis of 2008, there has been a rise in economic uncertainty and money demand research. The money demand is vital in monetary policy, which has implications for the regional economy. This study aims to analyse the money demand in Indonesia in the middle of global economic uncertainty, as well as the contribution of the study, which includes the economic and monetary policy uncertainty in a separate model for an enhanced money demand function. The study used a structural vector autoregressive (SVAR) approach. The results indicate that monetary demand is negatively affected by economic uncertainty. With the development of the financial sector, the impact of economic uncertainty and the unpredictability of US monetary policy drives people to be more cautious, resulting in a movement of "wealth" to other instruments. The current study implies that the monetary policy in the form of interest rates as the response to the global condition should consider monetary aggregates in terms of money demand as a precautionary measure to maintain money demand. The study revealed that stable money demand suggests inflation targeting as a monetary policy that can enhance monetary policy in the face of rising economic uncertainty.

Dampak Sistem Pembayaran Non-Tunai Terhadap Permintaan Uang Kartal di Indonesia

The stability of the demand for money is important to maintain the value of therupiah. This stability is seen in terms of the amount of currency and the ability ofmoney to fulfill all transactions in a short time. The use of non-cash money canhelp speed up the processing of financial transactions, but on the one hand it canhave an impact on changes in the demand for currency, which in turn affects thestability of the money supply. For this reason, it is necessary to conduct researchon the impact of using non-cash money on the demand for currency in Indonesia.This study analyzes the impact of non-cash payments using cards (APMK) on thedemand for currency in Indonesia for the 2014-2017 period. The analytical toolsused in this study are Vector Autoregression (VAR) to determine causality,Impulse Response Function (IRF) and Variance Decomposition (VD). The resultsshowed that the increase in the use of card-based non-cash money had an impacton reducing the demand for money in Indonesia in the 2014-2017 period. Thenon-cash money shock has an impact on the shock of changes in the demand forcurrency.

Pengaruh Pembayaran Non Tunai dan Tingkat Suku Bunga Kebijakan Terhadap Sistem Pembayaran di Indonesia

This study aims to analyze the effect of non-cash payments and policy interest rates on the demand for money in Indonesia in the long and short term. The analysis method used is the Error Correction Model (ECM) with secondary data including electronic money, Card-Based Payment Instruments, BI-RTGS, SKNBI, policy interest rates and M2. The results showed that in the long run, electronic money and APMK had a positive and significant effect on the demand for money. SKNBI and BI-RTGS had a negative and significant effect on demand for money. “In the short term, APMK has a positive and significant effect on money demand. E-Money, SKNBI and BI-RTGS both have positive and insignificant effects on money demand. Policy interest rates have a negative and insignificant effect on money demand in the long and short term. The implication of this research is that in the future there will be more and more people transacting non-cash because it is considered safer, easier and faster. In addition, the demand for base money is reduced which in turn can affect the implementation of the central bank's duties in implementing monetary policy, especially controlling monetary amounts. The development of information technology will have implications for the reduced role of base money in payment transactions.

Narrow Money Demand in Indonesia and in Other Transitional Economies – Model Selection and Forecasting

Purpose: This paper aims to incorporate model uncertainty in variable selection and forecasting in the monetarist money demand model and check whether the emerging economies such as the Czech Republic, Poland, Hungary, Russia, Mexico, Brazil, Turkey, India, Republic of South Africa, and Indonesia follow this model in the long-run. The case of the United Kingdom serves as a benchmark for the study. Design/Methodology/Approach: In dynamic econometric modeling, the number of potential explanatory variables increases rapidly, and model uncertainty grows very fast. Consequently, empirical modeling of money demand needs a comprehensive strategy for model selection and forecasting. We use Bayesian averaging of classical estimates (BACE) as an appropriate model reduction strategy. The monetary model serves as the theoretical basis for empirical equilibrium error-correction models (EqCM) and employing the Bayesian averaging of classical estimates (BACE) approach for variable and model selection and forecasting. Findings: Four theoretical and competitive model specifications are proposed and empirically tested. We found that monetary systems in Indonesia and other analyzed economies are both stable and theory consistent. The forecasts generated for Indonesia are accurate. The robustness of the model selection based on the BACE procedure was strongly confirmed. Practical Implications: The proposed procedure is valid for practical application, particularly in dynamic model selection and forecasting. Originality/Value: The novelty of this research lies in employing the BACE approach to model the demand for money with the equilibrium error correction (EqCM) mechanism.

THE STABILTY OF MONEY DEMAND IN INDONESIA: AN ARDL APPROACH

This study examines the demand for money for both M2 and M1 in Indonesia using the autoregressive distributed lag (ARDL) approach. Based on the results of the bound test, the demand for money in Indonesia is co-integrated, and there is a long-term relationship with factors its determinant namely, income, inflation, domestic interest rates, foreign interest rates and exchange rates. Income, inflation and exchange rate variables have a positive effect on M2 and M1 in the short and long term, while the interest rate variable only affects M2. The stability test using the CUSUM and CUSUMQ approaches found that the demand for money in Indonesia is unstable. The instability in demand for money implies that the money targeting policy in Indonesia cannot be implemented

MODEL PERMINTAAN UANG DI INDONESIA DENGAN PENDEKATAN VECTOR ERROR CORRECTION MODEL

This research aims to estimate the demand for money model in Indonesia for 2005.22015.12. The variables used in this research are demand for money, interest rate, inflation, and exchange rate (IDR/US$). The stationary test with ADF used to test unit root in the data. Cointegration test applied to estimate the long run relationship between variables. This research employed the Vector Error Correction Model (VECM) to estimate the money demand model in Indonesia. The results showed that all the data was stationer at the difference level (1%). There were long run relationship between interest rate, inflation and exchange rate to demand for money in Indonesia. The VECM model could not explain interaction between explanatory variables to independent variables. In the short run, there were not relationship between interest rate, inflation and exchange rate to demand for money in Indonesia for 2005.2-2015.12.

Dampak perbedaan suku bunga terhadap permintaan uang: Kasus Amerika Serikat dan Indonesia

This study aims to look at the demand for money in Indonesia 2010Q1-2017Q4. In this research using the VAR (Vector Auto Regressive) model. This study attempts to predict time series variables and on the dynamic impact of analysis of disturbance factors in each variable and assesses the interrelationships between variables using the program Eviews 9.0. In this study, researchers tried to test Frriedman's theory by focusing on the difference between Indonesian interest rates and US interest rates. The important thing is, this study argues that the differential US dollar interest coefficient from the money demand function can describe financial dollarization in Indonesia. Indonesia is trying to keep capital flows out of other countries, especially the United States by keeping interest rates higher than the United States. This means that the higher interest rate differentials between Indonesia and the United States will make more capital inflow to Indonesia, so will make higher demand for money in Indonesia. The results show that all variables used in this study are stationary at first difference and have the appropriate model in lag 5

Non cash payment and demand for real money in Indonesia

Non-cash payments in Indonesia are currently developing rapidly. The development of the form of money from just paper money and coins into an electronic money is predicted to have an effect on real money demand, not only in Indonesia. The use of electronic money in Indonesia itself continues to increase especially supported by technological developments. The purpose of this study was to analyse the effect of non-cash payments on real money demand in Indonesia. The method used is Error Correction Model (ECM) using secondary data from 2010 to 2015. The independent variable is the amount of money circulated by Bank Indonesia, and the independent variables used are the value of debit / ATM card transactions, credit cards, and e -money. The results indicate that in the long run credit cards have a significant negative effect on cash circulation in the community, while debit cards have a significant positive effect and affect cash. While in the short term, credit cards and e-money are not significant for cash, and only debit cards only have a significant effect on cash.

ANALYZING THE INFLUENCE OF INTEREST RATES ON MONEY DEMAND ACCORDING TO KEYNESIAN THEORY

The purpose of this research is to analyze the factors that influence money demand which are characterized by the amount of money currency (M1) in Indonesia, one of which is interest rates. The model of observation analysis used in this study is OLS (Ordinary Least Square), as a whole the tests performed are by linear constraint tests, statistical tests and classic assumption tests. In this model, the variable domestic interest rates in Indonesia are used as explanatory components. From these variables examined whether it influences the demand for money (the velocity of money) M1 or not.The results obtained from this study are that domestic interest rates have a negative and significant influence on the demand for money in Indonesia, these results are consistent with Keynesian theory, that interest rates increase, the demand for money for the cash balance will decrease.

An Empirical Study On The Influence Of Islamic Values On Money Demand (Case Study: University of Darussalam, Gontor and Mantingan Campus)

Chapra thought about money demand contains Islamic Values. The research on Chapra’s money demand has been done by some researchers such as Ebrinda and Sri Wahyuni, both researchers are in macro level, and the results of Ebrinda’s research is that social values have not significant effect on Islamic money demand in Indonesia and limit her research on social values, while the results of Sri Wahyuni’s research is that social values have not significant effect on money demand in the short term and significant effect in the long term. From here the researcher try to examine the effect of Islamic values on money demand in micro level at University of Darussalam Gontor, in addition to the pesantren system also has high Islamic values. The purpose of this study is to determine the effect of Islamic values on money demand from micro perspective. This research is quantitative research. In data collection, the researcher uses a questionnaire method. The data is analyzed by multiple linear regression method. The method is used to predict the value of a dependent variable based on the values of two or more variables. The results of research is that Islamic values have not significant effect on money demand. It’s proven by significance level which is still more than 0.05. The significance level of needs is 0.4, social values is 0.7, wasteful spending is 0.3 and savings is 0.3. While the variables that have significant effect are income with significance level 0.00, investment 0.00, and presupposition investment 0.04.

RESPONSIVENESS OF SOCIAL VALUES AND REAL GROSS DOMESTIC BRUTO ON MONEY DEMAND IN INDONESIA

The purpose of this study was to determine the effect, estimates shocks and determine the contribution of , social values, real GDP currency, demand deposits wadi'ah, Mudaraba savings, deposits mudaraba and Islamic Bank Returns to money demand in Indonesia. Real GDP and social values theoretically able to increase money demand using each mechanism. Money demand represented by M2 with a composition comprising of fiat money, wadiah demand deposits, mudaraba savings and mudaraba investment deposits completed Islamic Bank return as balancing cost in Money demand. The research method used in this research is comparative quantitative. This research utilizes 8 (eight) variable which then unit root test, determining Lag Optimal, Cointegrate-Test, VECM Estimates, Impulse Response Function and Variance Decomposition are carried out. The results of VECM estimation showed that real GDP, fiat money, wadiah demand deposits, sharia return, mudaraba savings and mudaraba investment deposits are significantly influencing the amount of Money demand in long term. In short term, social values significantly influencing the amount of money demand in Indonesia. The results of Impulse response showed that real GDP positively responded by the M2. Then, social values positively responded, fiat money positively responded, wadiah deposits positively responded, mudaraba savings negatively responded, mudaraba deposits positively responded and sharia return positively responded by the M2IS. Variance decomposition results showed that social values has the biggest contribution, then followed by demand deposits wadi'ah, mudaraba deposits, mudaraba savings, currency, real GDP and return sharia smallest.

Analysis Of Factors Affecting Money Demand In Indonesia Year 2006-2015 With Approach Error Corection Model (ECM)

This study is a study of the demand for currency in Indonesia in the period 2006-2015. The focus of this research is to analyze what factors affect the demand for currency in Indonesia in 2006-2015. Inflation in the short and long term has a positive and significant relationship to the demand for money in Indonesia. Short-term interest rates have a negative and insignificant relationship while in the long run have a negative and significant relationship to the demand for money in Indonesia. Gross Domestic Product (GDP) in the short term has a positive and insignificant relationship to the demand for money in Indonesia while in the long run the GDP has a positive and significant impact on the demand for money in Indonesia.

DAMPAK KRISIS TERHADAP PERMINTAAN UANG DI INDONESIA PERIODE 1994-2004

The paper examines relationship of the demand for money in Indonesia with national income (GDP real), interest rate (time deposit interest rate (quarterly)), inflation rate (the growth ofCPI) and crisis (dummy, which 0 = before crisis (from 1994:1 to 1997:2) and 1 = crisis (from 1997:3 to 2004:4) and to determine which variable had the most dominant effect to demand for money and also to know the demand for money stability in Indonesia in 1994-2004 period. To know the effect of the independent variables to the dependent variable we using regression models with OLS (Ordinary Least Squares) method and to know the stability we using the dummy variable approach. The result of the regression show GDP real, interest rate, inflation and crisis had effect to demand for money Ml and M2, and the stability test find there is instability demand for money Ml andM.2 in Indonesia.

Financial Liberalization and Divisia Money Demand in Indonesia

Money demand function that turns out to be unstable due to the financial liberalization has affected the effectiveness of monetary policy that utilizes monetary targeting as policy target. Thus, Divisia monetary aggregate that is consistent with the economic theory has been used to examine the money demand function in Indonesia. Monetization is also included as a determinant of money demand to measure the financial deepening. A stable M2 money demand has been identified via the use of Divisia M2 money and the inclusion of monetization variable. Monetary targeting can serve as alternative policy target for Indonesia and there is a possibility for a return to monetary targeting in Indonesia.

Analisis Permintaan Uang Riil di Indonesia

Abstract. This research aims to determine how the relationship between variables GDP, inflation rate, interest rate and exchange rate against the real demand for money in Indonesia. The data used in the empirical study of a sequence of data monthly time of year 2011.01 through 2015. 12 from Central Bank of Indonesia and the Central Statistics Agency (BPS). The analysis method in this research is Vector Error Correction Model (VECM). The results showed that there is a one-way relationship between the real demand for money on interest rates, one-way relationship between GDP against exchange rate and interest rates, then the one-way relationship between inflation against exchange rate. Then, there is a two-way relationship between GDP and the real demand for money, two-way relationship between inflation and demand for real money, two-way relationship between GDP and inflation, two-way relationship between interest rates and inflation as well as two-way relationship between interest rates and exchange rate. The results also showed GDP does not significantly affect the real demand for money. Variable exchange rate positively and significantly affect the real demand for money in the short term. While the interest rate a significant negative effect on the real demand for money. The real demand for money in Indonesia in the long term positively and significantly influenced by variables GDP. While the variable exchange rate and interest rate negative effect. Keywords: Real demand for money, Inflation, GDP, Exchange rate, Interest rate, Abstrak. Penelitian ini bertujuan untuk mengetahui seberapa keterkaitan antar variabel pdb, tingkat inflasi, tingkat suku bunga dan nilai tukar terhadap permintan uang riil di Indonesia. Data yang digunakan dalam kajian empiris ini merupakan data runtutaan waktu bulanan dari tahun 2011.01 sampai 2015. 12 yang berasal dari Bank Indonesia dan Badan Pusat Statistik (BPS). Alat analisis yang digunakan yaitu Vector Error Correction Model (VECM). Hasil penelitian menunjukkan terdapat hubungan searah antara permintaan uang riil terhadap tingkat suku bunga, antara PDB terhadap Kurs dan tingkat suku bunga, antara Inflasi terhadap Kurs. Terakhir, terdapat hubungan dua arah antara PDB dan permintaan uang riil, hubungan dua arah antara Inflasi dan permintaan uang riil, hubungan dua arah antara PDB dan Inflasi, hubungan dua arah antara tingkat suku bunga dan Inflasi serta hubungan dua arah antara tingkat suku bunga dan Kurs. Hasil penelitian ini juga menunjukan PDB tidak signifikan mempengaruhi permintaan uang. Variabel Kurs berpengaruh positif dan signifikan mempengaruhi permintaan uang riil dalam jangka pendek. Sedangkan tingkat suku bunga berpengaruh negatif dan signifikan terhadap permintaan uang riil. Permintaan uang riil di Indonesia dalam jangka panjang dipengaruhi secara positif dan signifikan oleh variabel PDB. Sedangkan variabel Kurs dan suku bunga berpengaruh negatif.Kata Kunci: Permintaan Uang Riil, Inflasi, PDB, Kurs, Suku Bunga

ANALISIS FAKTOR-FAKTOR YANG MEMPENGARUHI PERMINTAAN UANG DI INDONESIA TAHUN 1999 : Q1 - 2010 : Q4 DENGAN PENDEKATAN ERROR CORECTION MODELS (ECM)

Money has a very important role in the modern economy. Money demand function is often used by central banks in various state as a tool to determine the target growth of money or the money supply. Make up money supply to encourage excessive price increases that exceed the level expected in the long run can undermine economic growth. Conversely, if the increase in the money supply to low the debility economic will happen. This study aims to analyze the factors that influence the demand for money in Indonesia in the short and long run. This research used data coherent time or time series period of 1999:Q1 to 2010 : Q4. The data used are quarterly. Model used the tool of error correction model of econometrical analysis. This model can explain the behavior of short and long run. The results showed (1) the inflation variable in the short and long run has positive and significant impact on the demand for money in Indonesia. (2) the interest rate variable in the short run has no significant negative impact and long run has negative and significant impact on the demand for money in Indonesia. (3) the GDP variable in short run is not significant and long run has positive and significant impact on the demand for money in Indonesia. (4) Error Corection Term marked positive and significant indicate valid models and can used to estimate the demand for money in Indonesia. Based on the results of this study concluded that significant inflation variable in influencing the demand for money in Indonesia, both in the short and long run. The interest rate and GDP variable in short run is not significant, while in long run both are significant impact on demand for money in Indonesia. Bank Indonesia as the monetary authority in Indonesia expect maintain monetary stability through a guard against inflation, as the research results in both the short and long run inflation significant influence the demand for money in Indonesia.