THE IMPACT OF ELECTRONIC MONEY AND ATM+DEBIT TRANSACTION VOLUMES ON CURRENCY DEMAND IN INDONESIA BY USING ARDL BOUNDS TESTING APPROACH

Abstract

This study examines the effect of electronic money transaction volume and ATM/debit transaction volume on the demand for currency in circulation in Indonesia, with the BI Rate and economic activity included as control variables. This study uses monthly data from January 2022 to December 2025 obtained from Bank Indonesia and Statistics Indonesia. The dependent variable is real currency demand, while the independent variables are electronic money transaction volume, ATM/debit transaction volume, the Bank Indonesia (BI) Rate, and economic activity. The analysis employs the Augmented Dickey-Fuller (ADF) unit root test, a first-difference regression model to estimate short-run effects, and the Autoregressive Distributed Lag (ARDL) approach with the Bounds Test to examine the existence of a long-run relationship.

The ADF results show that all variables are non-stationary at level but become stationary at first difference, indicating that all variables are integrated of order one, or I(1). The first-difference regression results indicate that the electronic money transaction volume does not significantly affect changes in real currency demand. ATM/debit transaction volume has a positive effect and is significant only at the 10 percent level. Meanwhile, the BI Rate and economic activity are not statistically significant in the short run. The Bounds Test results confirm the absence of cointegration, suggesting that no long-run relationship exists among the variables.