Digital Payment and Economic Growth: Evidence from India
JOURNAL ARTICLE
Cite JOURNAL ARTICLE
Style
Format
Digital Payment and Economic Growth: Evidence from India
Azeez N. P., Abdul | Imdadul Haque, Mohammad | Akhtar, S. M. Jawed
Applied Economics Quarterly, Vol. 68 (2022), Iss. 2 : pp. 79–93
Additional Information
Article Details
Pricing
Author Details
Corresponding author. Department of Economics, Aligarh Muslim University, Aligarh, Uttar Pradesh, India, 202002.
Department of Economics, Aligarh Muslim University, Aligarh, Uttar Pradesh, India, 202002.
Department of Economics, Aligarh Muslim University Aligarh, Uttar Pradesh, India, 202002.
References
-
Ahmad, M./Majeed, A./Khan, M. A./Sohaib, M./Shehzad, K. (2021): “Digital Financial Inclusion and Economic Growth: Provincial Data Analysis of China,” China Economic Journal 1(1), 1–20, https://doi.org/10.1080/17538963.2021.1882064.
Google Scholar -
Aldaas, A. (2021): “A Study on Electronic Payments and Economic Growth: Global Evidences,” Accounting 7(2), 409–414, https://doi.org/10.5267/j.ac.2020.11.010.
Google Scholar -
Angamuthu, B. (2020): “Growth of Digital Payments in India,” NMIMS Journal of Economics and Public Policy V(4), 31–41.
Google Scholar -
Asli Demirguc, K./Leora, K./Singer, D. (2017): “Financial Inclusion and Inclusive Growth: A Review of Recent Empirical Evidence,” Policy Research Working Paper 8040, World Bank Group.
Google Scholar -
Beck, T./Demirgüç-Kunt, A./Levine, R. (2007): “Finance, Inequality and the Poor”. Journal of Economic Growth 12(1), 27–49. https://doi.org/10.1007/s10887-007-9010-6.
Google Scholar -
Boylan, T. A./Cuddy, M. P./Muircheartaigh. I. (1980): “The Functional Form of the Aggregate Import Demand Equation: A Comparison of Three European Economies,” Journal of International Economics 10, 561–566. http://dx.doi.org/10.1016/0022-1996(80)90006-9.
Google Scholar -
Chauhan, S./Indapurkar, K. (2017): “Financial Literacy in India: A Review and Roadmap Ahead in the Times of Digitalization and Demonetization,” International Journal of Economic Research 14(16), 165–173.
Google Scholar -
Dahlman, C./Mealy, S./Wermelinger, M. (2016): “Harnessing the Digital Economy for Developing Countries,” 334.
Google Scholar -
Davidovic, S./Loukoianova, E./Sullivan, C./Tourpe, H. (2019): “Strategy for Fintech Applications in the Pacific Island Countries,” Policy Papers, IMF 19, https://doi.org/10.5089/9781498326735.087.
Google Scholar -
Deloitte (2013): “The Economic Impact of Online Payments: Breaking Barriers across Europe,” The Creative Studio at Deloitte, London, 1(1), 1–2, 4, retrieved from https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/about-deloitte/deloitte-uk-economic-impact-of-online-payments-tmt.pdf.
Google Scholar -
Demirgüç-Kunt, A./Klapper, L./Singer, D./Ansar, S. (2022): “Global Findex Database 2021: Financial Inclusion, Digital Payments, and Resilience in the Age of Covid-19,” Washington, D.C., https://doi.org/10.1596/978-1-4648-1897-4.
Google Scholar -
Doroodian, K./Koshal, R. K./Al-Muhanna, S. (1994): “An Examination of Traditional Aggregate Import Demand Function for Saudi Arabia,” Applied Economics 26, 909–915, http://dx.doi.org/10.1080/00036849400000052.
Google Scholar -
Fernandes, C./Borges, M. R./Caiado, J. (2021): “The Contribution of Digital Financial Services to Financial Inclusion in Mozambique: An ARDL Model Approach,” Applied Economics 53(3), 400–409, https://doi.org/10.1080/00036846.2020.1808177.
Google Scholar -
Goldestein, M./Khan, M. S. (1976): “Large Versus Small Price Changes and the Demand for Imports,” IMF Staff Working Paper 3, 200–225.
Google Scholar -
Haque, M. I. (2015): “Are Exports and Imports of Saudi Arabia Cointegrated? An Empirical Study,” Applied Econometrics and International Development, 15(1), 111–130.
Google Scholar -
Hasan, I./Renzis, T. D./Schmiedel, H. (2012): “Retail Payments and Economic Growth (19),” retrieved from https://www.econstor.eu/bitstream/10419/212222/1/bof-rdp2012-019.pdf.
Google Scholar -
Khan, M. S./Ross, K. Z. (1977): “The Functional Form of the Aggregate Import Demand Equation,” Journal of International Economics 7, 149–160, http://dx.doi.org/0.1016/0022-1996(77)90028-9.
Google Scholar -
Kim, J. Y. (2014): “Digital Financial Inclusion,” The World Bank, 1–5, retrieved from https://www.worldbank.org/en/topic/financialinclusion/publication/digital-financial-inclusion.
Google Scholar -
Kodan, A. S./Chhikara, K. S. (2013): “A Theoretical and Quantitative Analysis of Financial Inclusion and Economic Growth,” Management and Labour Studies 38(1), 103–133, https://doi.org/10.1177/0258042X13498009.
Google Scholar -
Krishnan, N. K./Johri, A./Chandrasekaran, R./Pal, J. (2019): “Cashing out: Digital Payments and Resilience Post-Demonetization,” Pervasive Health: Pervasive Computing Technologies for Healthcare, https://doi.org/10.1145/3287098.3287103.
Google Scholar -
Li, J./Wu, Y./Xiao, J. J. (2020): “The Impact of Digital Finance on Household Consumption: Evidence from China,” Economic Modelling, 86(September 2019), 317–326, https://doi.org/10.1016/j.econmod.2019.09.027.
Google Scholar -
Mann, R. J. (2012): “Adopting, Using, and Discarding Paper and Electronic Payment Instruments: Variation by Age and Race,” Public Policy Discussion Papers, CPRC, Federal Reserve Bank of Boston, 11(2), 1–31, https://doi.org/10.2139/ssrn.1862169.
Google Scholar -
OECD (2015): OECD Digital Economy Outlook 2015, https://doi.org/10.1787/9789264232440-en.
Google Scholar -
Paad, E./Young, S./Kinzinger, A./Lohiya, N. (2020): “Cashing Out: Economic Growth through Payment Digitization. Mastercard, Proprietary and Confidentia,” White Paper 1(1), 1–16, https://newsroom.mastercard.com/mea/files/2020/05/Mastercard-White-Paper-Cashing-Out-Economic-Growth-through-Payment-Digitisation1.pdf.
Google Scholar -
Papadopoulos, G. (2011): “Electronic Money and the Possibility of a Cashless Society,” SSRN Electronic Journal 1–22, https://doi.org/10.2139/ssrn.982781.
Google Scholar -
Patil, D. A. (2018): “Digital Transformation in Financial Services and Challenges and Opportunities,” International Journal of Trend in Scientific Research and Development, Special Issue ICDEBI2018, 10–12, https://doi.org/10.31142/ijtsrd18661.
Google Scholar -
Pesaran, M. H./Shin, Y./Smith, R. J. (2001): “Bounds Testing Approaches to the Analysis of Level Relationships,” Journal of Applied Econometrics, 16(3), 289–326.
Google Scholar -
RBI (2020): “Assessment of the Progress of Digitisation from Cash to Electronic,” RBI Occasional Paper (Cic), 1–16, retrieved from https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=19417.
Google Scholar -
RBI (2021): “BRICS Digital Financial Inclusion Report,” retrieved from https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/BRICSDIGITAL7330275ABF0C4198B581897DF2C131CA.PDF.
Google Scholar -
RBI (2022): “Annual Report 2021-22,” Reserve Bank of India (RBI), retrieved from https://rbidocs.rbi.org.in/rdocs/AnnualReport/PDFs/0RBIAR2021226AD1119FF6674A13865C988DF70B4E1A.PDF.
Google Scholar -
Rekha, G./Rajamani, K./Resmi, G. (2021): “Digital Financial Inclusion, Economic Freedom, Financial Development, and Growth: Implications from a Panel Data Analysis,” ADBI Working Paper Series 1244, Asian Development Institute Tokyo.
Google Scholar -
Schneider, F./Kepler, J. (2011): “The Shadow Economy in Europe: Using Electronic Payment Systems to Combat the Shadow Economy,” Visa Europe 1(1), 20, retrieved from www.visaeurope.com.
Google Scholar -
Sharma, M./Sharma, S. K. (2019): Theoretical Framework for Digital Payments in Rural India: Integrating UTAUT and Empowerment Theory, Volume 2, Springer International Publishing, https://doi.org/10.1007/978-3-030-20671-0.
Google Scholar -
Suominen, K. (2022): “Accelerating Digital Trade in Latin America and the Caribbean,” World Economic Forum, retrieved from https://publications.iadb.org/bitstream/handle/11319/8166/Accelerating-Digital-Trade-in-Latin-America-and-the-Caribbean.PDF?sequence=1.
Google Scholar -
Vives, X. (2019): “Digital Disruption in Banking,” Annual Review of Financial Economics, 11(2), 243–272, https://doi.org/10.1146/annurev-financial-100719-120854.
Google Scholar -
World Bank (2016): “World Development Report: Digital Dividends,” World Bank Group, 1–6. https://doi.org/10.1596/978-1-4648-0671-1.
Google Scholar -
Yang, L./Zhang, Y. (2020): “Digital Financial Inclusion and Sustainable Growth of Small and Micro Enterprises-Evidence based on China’s New Third Board Market Listed Companies,” Sustainability (Switzerland) 12(9), https://doi.org/10.3390/su12093733.
Google Scholar -
Zandi, M./Koropeckyj, S./Singh, V./Matsiras, P. (2016): “The Impact of Electronic Financial Payments on Economic Growth,” Moody’s Analytics 1(1), 1–31, retrieved from https://usa.visa.com/content/dam/VCOM/download/visa-everywhere/global-impact/impact-of-electronic-payments-on-economic-growth.pdf.
Google Scholar -
Zandi, M./Singh, V./Irving, J. (2013): “The Impact of Income Inequality on Economic Growth. Economic and Consumer Credit Analytics,” Moody’s Analytics 1(1), 59–100. https://doi.org/10.1787/9789264235120-5-en.
Google Scholar -
Zhang, X./Zhang, J./Wan, G./Luo, Z. (2019): “Fintech, Growth and Inequality: Evidence from China’s Household Survey Data,” The Singapore Economic Review 65(1), 1–27. https://doi.org/10.1142/S0217590819440028.
Google Scholar -
Zhou, R. (2022): “Sustainable Economic Development, Digital Payment, and Consumer Demand: Evidence from China,” International Journal of Environmental Research and Public Health 19(14), https://doi.org/10.3390/ijerph19148819.
Google Scholar
Abstract
Technological advancements have been the driving factor responsible for the structural composition of the financial markets and the development of digital financial technologies. The widespread use of information and communication technology (ICT) and artificial intelligence in the operation of the global financial sector is the hallmark of this development. Access to and usage of financial services have changed significantly due to this revolution and, more recently, the pandemic, which embraced digital solutions. Digitization of the economy promotes economic growth through inclusivity, efficiency, and innovation. The availability of electronic payment systems triggers a positive economic impact through rising consumption and production, thereby creating more employment and income and, in turn, strengthening economic growth. It benefits consumers and merchants as these payment methods are safer and more efficient, convenient, transparent, and affordable. Many empirical studies support the idea that digital financial development is crucial for enhancing efficiency and productivity and promoting a country’s economic growth. The study explores the relationship between gross value added, credit transfer, debit transfer, card payment, and prepaid instruments in India taking quarterly data from 2011 to 2019 and using the Autoregressive Distributive Lag (ARDL) model. The study reports a cointegrating relationship between the variables and discusses the implications of this relationship.
Table of Contents
Section Title | Page | Action | Price |
---|---|---|---|
Abdul Azeez N. P. / Mohammad Imdadul Haque / S. M. Jawed Akhtar: Digital Payment and Economic Growth: Evidence from India | 79 | ||
1. Introduction | 79 | ||
2. Literature Review | 81 | ||
3. Research Methodology | 82 | ||
4. Analysis of Summary Statistics | 84 | ||
5. Analysis | 85 | ||
6. Conclusion | 88 | ||
References | 89 | ||
Appendix | 92 |