The Role of Digital Payments in Driving Regional Economic Growth: A Panel Data Analysis with Structural Break

Wishnu Badrawani, Citra Amanda, Novi Maryaningsih and Carla Sheila Wulandari

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Abstract: Using a panel payment system dataset of thirty-three provinces in Indonesia, we examine the impact of digital payment on the regional economy, considering structural breaks induced by unprecedented events and policies. Digital payments were determined to significantly affect regional income and consumption before and after the identified breakpoint, with the impact greater following the break. Employing a novel method for structural break analysis within interactive effects panel data, we demonstrate that the break in retail payment models is due to COVID-19, and the break in the wholesale payment model is associated with the central bank's payment system policy.

Date: 2025-08
New Economics Papers: this item is included in nep-fdg and nep-pay
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