Alternative Payment Systems Implication for Currency Demand and Monetary Policy in Developing Economy: A Case Study of Nigeria
Date
2013-05-16
Authors
Oyelami, Lukman O
Yinusa, Dauda O
Journal Title
Journal ISSN
Volume Title
Publisher
International Journal of Humanities and Social Science
Abstract
This paper investigates the implication of the alternative payment systems on currency demand and monetary
policy using monthly data between 2008 and 2010. Vector Error Correction Model (VECM) was used due to
endogenous assumption that predicated our model and the co-integrating behavour of variables employed.
Previous theoretical and empirical studies on this issue are scarce for developing economies and to best of our
knowledge none exists for Nigeria. The empirical results from Impulse-Response reveal that internet payment and
mobile money substitute currency while credit card (ATM) and Point of Sale (POS) compliment it. Similarly,
Apart from debit card (ATM) and internet payment (WEB) all other payment channels respond negatively to
innovation in interest rate throughout the periods including currency. This finding may have serious implication
for the conduct of monetary policy especially in developing countries as it alternative payment systems seem to
dampen the effectiveness of monetary policy
Description
Keywords
Impulse-Response , co-integration , currency , payment
Citation
Oyelami, L. O., & Yinusa, D. O. (2013). Alternative Payment Systems Implication for Currency Demand and Monetary Policy in Developing Economy: A Case Study of Nigeria. International Journal of Humanities and Social Science, 3(20), 253-260