Dynamic Model of the Effect of Electronic Money on Economic Growth in ASEAN-3

In recent years, the use of e-money in 3 ASEAN countries such as Malaysia, Indonesia, and Thailand have increased. This study investigates whether the increasing of the use of electronic money, both in nominal and volume, affect economic growth in three ASEAN countries by employing the panel Error Correction Model (PECM) with panel data during the 2018Q1–2022Q1. The results show that, in short-run, the nominal of e-money transactions has no effect on economic growth. In the long run, an increase in the nominal of e-money transactions worsen economic growth. Meanwhile, an increase in volume of transaction can expand economic growth in the short and long run. This result is in line with the monetary theory which explain that an increase in the volume of e-money transactions will give large benefits to the economy. Therefore, the increasing facilities of e-money card readers and socializing electronic money to the public, especially people who live outside big cities, become an important thing to maintain the sustainable economic growth.