The Relationship Between Electronic-Money Penetration and Household Consumption: VECM Granger causality analysis

Masedi K. Tshukudu ()
Additional contact information
Masedi K. Tshukudu: Botswana Institute for Development Policy Analysis

No 48, Working Papers from Botswana Institute for Development Policy Analysis

Abstract: The development and use of Electronic Money (e-money) remain one of the hottest topics in developing countries, yet literature on the relationship between e-money penetration and household consumption remains negligible. Available literature confirms that e-money penetration has a significant impact on economic activity in both developed and emerging economies. In Botswana, the advancement of e-money is highly associated with the forces of consumer demand and the supply of e-money products in the market. However, the impacts of e-money on household consumption is not known. This paper, therefore, examines the causal link between e-money penetration (EM) and household consumption (HC) using quarterly data over the period 2007-2017. The study uses Granger causality test based on the Vector Error Correction Model. The empirical results provide evidence of the causal impact of household consumption to e-money penetration in Botswana only in the short-run. In addition, the empirical results also confirm that if the use of electronic payment technologies is developed in the long-run, e-money penetration would predict household consumption in Botswana. It can be concluded that the growth impact of e-money on household consumption is still insignificant in Botswana, but in the long-run the use of e-money technologies can impact household consumption. It is therefore, important that the government and financial service providers continue to provide a more conducive environment to increase the electronic payments outlets.

Keywords: Causality; Electronic money; e-money; Household consumption (search for similar items in EconPapers)
Pages: 20
Date: 2018-03
References: Add references at CitEc
Citations:

Downloads: (external link)
http://knowledge.bidpa.bw:8080/xmlui/handle/123456789/131 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bid:wpaper:48

Access Statistics for this paper

More papers in Working Papers from Botswana Institute for Development Policy Analysis
Bibliographic data for series maintained by Poloko Ntokwane ().