Exploring the relationship between non-cash transactions, inflation, and the money supply

Abstract

This quantitative study investigates the relationship between non-cash transactions and the money supply in Indonesia, with inflation acting as a moderating variable. Utilizing secondary data sourced from monthly publications by Bank Indonesia (BI) and the Central Statistics Agency (BPS) spanning the period 2019-2021, the research employs an associative research design. The sample comprises 36 months of data, encompassing nominal figures on non-cash transactions, the money supply (M1), and monthly inflation rates. Regression analysis, including descriptive statistics, classical assumption tests, and moderating regression analysis (MRA), is conducted using the SPSS software. The findings reveal nuanced dynamics: while debit card transactions show no direct linear impact on the money supply, credit card transactions exhibit a dampening effect, and electronic money transactions emerge as a significant driver of monetary expansion. These insights shed light on the intricate relationship between transaction types and the money supply, informing policymakers and financial analysts in devising effective monetary strategies.