The Impact of E-Money Multiplier on Economic Growth in Indonesia

This study aims to investigate the impact of the e-money multiplier on Indonesian economic growth. The quarterly data used are sourced from Central Bank of Indonesia's publications from 2013Q1 to 2022Q4. The collected data are analyzed using the Error Correction Model (ECM) method because the data of all variables are stationary at the same I(1) level. The results show that the e-money multiplier tends to increase the money supply in the long run. Economic growth has been boosted by the money supply which is influenced by the e-money multiplier in the short term. This study also found that sustainable growth, which continues to increase both in the short and long term, is controlled by two main factors. These are the large amount of money supply in society and high transaction activity using money, also known as high money velocity. Because the e-money multiplier turns out to have a good impact on economic growth, it is expected that Central Bank of Indonesia keeps to monitor changes in the money supply due to the existence of electronic money. That situation may turn out to be detrimental to economic growth if the desire of the community to transact is weak.