Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/248023 
Year of Publication: 
2020
Citation: 
[Journal:] Verslas: Teorija ir praktika / Business: Theory and Practice [ISSN:] 1822-4202 [Volume:] 21 [Issue:] 1 [Publisher:] Vilnius Gediminas Technical University [Place:] Vilnius [Year:] 2020 [Pages:] 230-243
Publisher: 
Vilnius Gediminas Technical University, Vilnius
Abstract: 
The existence of non-inclusive households significantly reduces the effect of the interest rate change policy on households inter-temporal consumption decisions. Further, financial inclusion is closely related to fintech. On the one hand, fintech helps overcome the financial inclusion problem because fintech manages to reach those who were previously inaccessible by banks. On the other hand, fintech will change the payment system structure in an economy that will eventually affect the effectiveness of monetary policy. Using the Vector Error Correction Model (VECM) with the observation period of 2009-2018, this study aims to analyze the effects of financial inclusion and fintech on effectiveness of the Indonesian monetary policy within the framework of the transmission mechanism of monetary policy through interest rate channel with both the cost of capital effect and the substitution effect. The results demonstrate that financial inclusion level affects inflation rate as a proxy of effectiveness of the Indonesian monetary policy, both in the short run and long run. However, the effect of shocks in financial inclusion on inflation is not permanent. Meanwhile, fintech only affects inflation rate in the short run. However, shocks in fintech affect the volatility of inflation rate is permanent both through the substitution effect and the cost of capital effect.
Subjects: 
financial inclusion
financial technology (Fintech)
inflation
transmission mechanism of monetary policy
interest rate channel
Vector Error Correction Model (VECM)
JEL: 
E52
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.