Analysis of the Reciprocal Effect of Inflation and Investment and the Impact of E-money Transactions on inflation and Investment in Indonesia

Abstract

The development of technology and information has also spurred developments in the world of finance and banking, one of these innovations is the shift in the use of cash to non-cash money. Central Bank of Indonesia in 2009 launched the National Non-Cash Movement or more commonly referred to as the Less Cash Society (LCS), particularly in conducting transactions on economic activities using non-cash instruments. CBI's motive for launching the LCS was due to the rampant cases of counterfeiting money, as well as the high operational costs incurred by CBIeach year for printing, distributing, storing and destroying money. Then came what is known as electronic money (electronic money). Some of the e-money operators and other companies that have helped build e-money supporting infrastructure are fintech, and digital technology-based forms of financial services from fintech. The research method used in this study is explanatory research with quantitative solutions. Meanwhile, the variables analyzed are e-money, inflation and investment. The relationship between e-money and inflation and investment is a linear and direct relationship. Meanwhile, the relationship between inflation and investment is a reciprocal relationship. Therefore, the analysis model in this study used a simultaneous regression model which was estimated by the 2SLS method (two stage least squares) with the help of E-views software. This application is widely used for statistical and econometric analysis of time series data types. Broadly speaking, high e-money transactions affect the velocity of money circulation and the large amount of money circulating in society, and in theory (monetary quantity) e-money transactions can affect the inflation rate in Indonesia. So that with the growth of e-money users and transactions, the risk of inflation will increase.