Analysis of the Use of E-Money, Money Supply, and Gross Domestic Product on Interest Rate

Abstract

This research aims to examine the effect of a direct relationship between the use of e-money and the circulation of money on interest rates, as well as an indirect effect, namely through the intervening variable gross domestic product. This research method uses a statistical model of path analysis. The sample used was secondary data fetched from the Website of Bank Indonesia (BI) and the Central Bureau of Statistics (BPS), since regulation on electronic payment method was officially issued by Bank Indonesia in May 2009-March 2023. The test results shows that e-money and money supply each, have a significant positive effect on gross domestic product variables. Gross domestic product variables had a negative effect on interest rates. E-money and money supply variables has a negative effect on interest rates, both directly or indirectly through the intervening variable of gross domestic product. Increasing e-money user and money supply, preponderant to gross domestic product, can decrease the interest rate. The results of this research are expected to provide benefits as a prediction of the Indonesian economy in the future, as a result of the issuance of electronic payment instruments. So for the regulators, they can set the right interest rate policy to be able to maintain stable economic conditions. Keywords: electronic money, money supply, gross domestic bruto, interest rate