Has Fintech Influenced Indonesia’s Exchange Rate and Inflation?

Narayan, Seema; Sahminan, Sahminan

doi:10.21098/bemp.v21i2.966

Cited by 24 publications

(31 citation statements)

References 15 publications

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“…Several authors show that, as a new and innovative business, FinTech is disrupting the financial services industry (Li et al, 2017;Zalan and Toufaily, 2017). Narayan and Sahminan (2018) present empirical evidence that, in Indonesia, FinTech has the capacity to reduce inflation and strengthen the rupiah against the US dollar. Li et al (2017) find that the effect of FinTech is positive on bank returns, implying complementarity between traditional banks and FinTech.…”

Section: Introductionmentioning

confidence: 87%

“…Motivated by FinTech's promise of low-cost business solutions in the provision of financial services, Narayan and Sahminan (2018) investigate the impact of FinTech on Indonesia's inflation rate and the exchange rate between the Indonesian rupiah and the US dollar from 1998 to 2017. The authors employ data on the number of FinTech firms and find that FinTech in Indonesia has been able to reduce inflation and strengthen the rupiah against the US dollar.…”

Section: B Fintech As a Financial Service Providermentioning

confidence: 99%

“…Table 1 presents the data set. The data on FinTech startups established each year are adopted from Narayan and Sahminan (2018), and the other economic/financial data series on Indonesia are extracted from the World Bank database. 4…”

Section: Datamentioning

confidence: 99%

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Does Fintech Matter for Indonesia’s Economic Growth?

Narayan¹

2019

BEMP

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This paper investigates the role of financial technology (FinTech) in propelling economic growth in Indonesia from 1998 to 2018. The FinTech industry employs a technology-based business model to provide financial services, including lending, payment, investment, and financing services. The study is motivated by endogenous growth theory, which seeks to explain technology as the most important driver of economic growth. The study finds that FinTech startups are positively correlated with Indonesia’s economic growth. FinTech firms in their first year are found to be disruptive, but they fail to have serious consequences on Indonesia’s economic growth; however, they seem to significantly encourage economic growth in their second year. These findings are derived after accounting for other important growth determinants, namely, capital per labor, foreign direct investment (FDI), stock market development, and trade openness.

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Section: Introductionmentioning

confidence: 87%

Section: B Fintech As a Financial Service Providermentioning

confidence: 99%

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Does Fintech Matter for Indonesia’s Economic Growth?

Narayan¹

2019

BEMP

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“…In general, they focused on the movement of exchange rate and inflation rate. Recently, some researchers incorporate bitcoin price growth , oil prices (Narayan, Falianty, and Tobing, 2019), and financial technology (Narayan and Sahminan, 2018) to explain the volatility of exchange rates. However, none of them exploits the interest rate policy as explanatory variable.…”

Section: Literature Reviewmentioning

confidence: 99%

Interest Rate Policy and Exchange Rates Volatility Lessons from Indonesia

Kuncoro

2020

Journal of Central Banking Theory and Practice

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Whether or not inflation targeting adoption leads to increased volatility of exchange rates is controversial. The volatility increases with inflation targeting as a result of the flexible exchange rate regime. Others argue that inflation targeting delivers the best outcomes in terms of lower exchange rate volatility. The purpose of this paper is to investigate whether interest rate policy in inflation targeting frameworks – that is subjected to control inflation rate – may reduce the volatility of exchange rates. To test the hypothesis, we use monthly data in the case of Indonesia over the period 2005(7)-2016(7). Several control variables are introduced in the regressions. The result of the autoregressive distributed lag model proves the interest rate policy and foreign exchange intervention fail to reduce the exchange rates volatility. It seems inflation targeting in Indonesia puts too much emphasis on stabilizing the domestic currency thus leading to benign neglect of stabilizing its external value, ultimately resulting in increased exchange rate volatility. These findings suggest that central bank credibility plays an important role in conducting inflation targeting policy which operates primarily through a signalling effect.

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“…Since FinTech platforms have the capability to improve the local currency value and reduce the inflation rate, the overall cost of business has reduced giving more opportunities to the traditional industries to prosper and grow. 41 The phenomenon that how FinTechs influence other industries can be explained by knowledge spillover theory. Rather than underpinning our idea with “MAR spillover” that explains technological knowledge spillover within the industry, our study is more inclined toward the “Jacobs spillover.” 42 Jacobs asserted that knowledge flows between complementary industries, customers, and suppliers.…”

Section: Theoretical Framework and Hypotheses Developmentmentioning

confidence: 99%

Boosting Sustainability in Healthcare Sector through Fintech: Analyzing the Moderating Role of Financial and ICT Development

Yahya

Waqas

et al. 2021

INQUIRY

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Healthcare organizations are setting new targets of sustainable practices to improve their financial performance without depleting social and natural capital. Maintaining a sustainable, resilient, and durable healthcare system facilitate economies to achieve sustainable competitiveness. Thus, it is important to address and fill the knowledge gap by identifying factors that improve a firm’s sustainability. Drawing on technological knowledge spillover theory, this study investigates the effect of FinTech development on the sustainable performance of healthcare firms using panel data comprised of 11 Asia-Pacific countries. By applying the 2-step GMM technique, we find a robust estimate that digital financial technologies improve the sustainable performance of the firms. Contrary to the substitution effect, our results further indicate that financial institutions are collaborating with FinTechs to facilitate financing at the individual and firm-level. We also find that financial and ICT development positively moderates the relationship between FinTech development and sustainable performance.

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Has Fintech Influenced Indonesia’s Exchange Rate and Inflation?

Cited by 24 publications

References 15 publications

Does Fintech Matter for Indonesia’s Economic Growth?

Does Fintech Matter for Indonesia’s Economic Growth?

Interest Rate Policy and Exchange Rates Volatility Lessons from Indonesia

Boosting Sustainability in Healthcare Sector through Fintech: Analyzing the Moderating Role of Financial and ICT Development

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