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Introducing Cashless Transaction Index based on the Effective Medium Approximation

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  • Mikrajuddin Abdullah

Abstract

The effective medium approximation (EMA) method is commonly used to estimate the effective conductivity development in composites containing two types of materials: conductors and insulators. The effective conductivity is a global parameter that measures how easily the composite conducts electric current. Currently, financial transactions in society take place in cash or cashless, and, in the cashless transactions the money flows faster than in the cash transactions. Therefore, to provide a cashless grading of countries, we introduce a cashless transaction index (CTI) which is calculated using the EMA method in which individuals who make cash transactions are analogous to the insulator element in the composite and individuals who make cash transactions are analogous to the conductor element. We define the CTI as the logarithmic of the effective conductivity of a country's transactions. We also introduce the time dependent equation for the cashless share. Estimates from the proposed model can explain well the data in the last few years.

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  • Mikrajuddin Abdullah, 2022. "Introducing Cashless Transaction Index based on the Effective Medium Approximation," Papers 2209.13470, arXiv.org.
    • Handle: RePEc:arx:papers:2209.13470
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    References listed on IDEAS

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    1. Semenenko, Marina G., 2003. "Application effective medium approximation approach for economic researching," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 329(1), pages 264-272.
    2. Massimiliano Zanin & David Papo & Miguel Romance & Regino Criado & Santiago Moral, 2016. "The topology of card transaction money flows," Papers 1605.04938, arXiv.org.
    3. Zanin, Massimiliano & Papo, David & Romance, Miguel & Criado, Regino & Moral, Santiago, 2016. "The topology of card transaction money flows," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 462(C), pages 134-140.
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