Using ARDL approach to cointehration for investigating the relationship between payment technologies and money demand on a world scale

Payam Mohammad Aliha, Tamat Sarmidi, Abu Hassan Shaar, Fathin Faizah Said

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

This paper estimates the relationship between financial innovation and money demand in world countries with a focus on the number of automated teller machines (ATMs) using the ARDL approach to cointegration. In this study, we estimated a conventional money demand model with currency in circulation (M2) as dependent variable and gross domestic product (GDP, constant 2005 US$), interest rate (IRATE), the number of automated teller machines per 100,000 adults (ATM) to take into account for the effects of financial innovation as dependent variables. It covers 215 countries and territories over the period 2004-2013. This paper adopts the bounds testing procedure developed by Pesaran et al. (2001) to test the stability of the long-run money demand and determine the short-run dynamics for all of the countries as a whole. The empirical evidence points to the existence of long-run and cointegrating relationships between variables meaning all of these variables move together in the long run. The speed of adjustment toward long run equilibrium is-0.4345 which means that the whole system gets back to long run equilibrium at the speed of 43.45 percent. The results confirm that in the short-run, ATM does not impact money demand.

Original languageEnglish
Pages (from-to)29-37
Number of pages9
JournalRegional Science Inquiry
Volume9
Issue number2
Publication statusPublished - 1 Dec 2017

Fingerprint

money
demand
Gross Domestic Product
innovation
testing procedure
gross domestic product
interest rate
currency
world
Payment
Money demand
Autoregressive distributed lag model
evidence
speed
Long-run equilibrium
Short-run
Financial innovation

Keywords

  • ARDL
  • Cointegration.
  • Financial innovations
  • Money demand
  • Stability

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development
  • Sociology and Political Science
  • Economics and Econometrics

Cite this

Using ARDL approach to cointehration for investigating the relationship between payment technologies and money demand on a world scale. / Mohammad Aliha, Payam; Sarmidi, Tamat; Shaar, Abu Hassan; Said, Fathin Faizah.

In: Regional Science Inquiry, Vol. 9, No. 2, 01.12.2017, p. 29-37.

Research output: Contribution to journalArticle

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