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Investigating The Impact Of Atm And Pos Terminals On Money Demand In Nine European Countries In The Context Of A Random Effect Model As The Appropriate Panel Data Model

Author

Listed:
  • Payam MOHAMMAD ALIHA

    (Ph.D student, Universiti Kebangsaan Malaysia (UKM), Malaysia)

  • Tamat SARMIDI

    (Associate Professor Dr. at Faculty of Economics and Management, Universiti Kebangsaan Malaysia (UKM), Malaysia)

  • Fathin FAIZAH SAID

    (Associate Professor Dr. at Faculty of Economics and Management, Universiti Kebangsaan Malaysia (UKM), Malaysia)

Abstract

This study investigates the effects of financial innovations on the demand for money using panel data for 9 European countries from 2014 to 2018. Such models assist in controlling for unobserved heterogeneity when this heterogeneity is constant over time and correlated (fixed effects) or uncorrelated (random effects) with independent variables. Hausman test and Breusch and Pagan Lagrangian multiplier test (LM) both indicate that the random effects model is appropriate. We use the conventional money demand that is enriched with the number of automated teller machines (ATM) and the number of point-of-sale (POS) terminals to proxy for the financial innovations. The estimation result of the chosen random effects regression indicate that the elasticity of the demand for real money to POS is about 10 percent meaning that money demand is not elastic with regard to POS. Also, the estimated coefficient of ATM is not significant.

Suggested Citation

  • Payam MOHAMMAD ALIHA & Tamat SARMIDI & Fathin FAIZAH SAID, 2020. "Investigating The Impact Of Atm And Pos Terminals On Money Demand In Nine European Countries In The Context Of A Random Effect Model As The Appropriate Panel Data Model," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 31-41, June.
    • Handle: RePEc:hrs:journl:v:xii:y:2020:i:2:p:31-41
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    References listed on IDEAS

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    1. Gentiana SHARKU & Etleva BAJRAMI, 2021. "Insurance-Economic Growth Nexus - Evidence From Selected Western Balkan'S Countries," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 53-68, June.

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    More about this item

    Keywords

    EU; money demand; random effects; fixed effects; financial innovation; panel data;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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