Does digital payment induce economic growth in emerging economies? - The mediating role of institutional quality, consumption expenditure, and bank credit - paper analysis

Oct 23, 2026

This paper analyzes the direct and interactive effect of digital payments on economic growth through institutional quality, consumption expenditure, and bank credit for 25 CPMI member countries over 2012–2020. Using Fixed Effects with Driscoll-Kraay Panel Corrected Estimators, it finds digital payments raise economic growth. Interaction effects with other variables do not promote growth. To capture country differences and enhance robustness, countries are classified into GDP per capita quantiles using BPQR, which confirms positive links involving payments, institutional quality, and consumption expenditure while credit relates negatively. Control variables such as inflation, exchange rate, health, and unemployment follow economic theory.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages20

Reading Time50 min

AccessFree to download

Abstract

Keywords

1. Introduction

Information Technology for Development ISSN: 0268-1102 (Print) 1554-0170 (Online) Journal [homepage: ](homepage: www.tandfonline.com/journals/titd20)[www.tandfonline.com/journals/titd20](homepage: www.tandfonline.com/journals/titd20) Does digital payment induce economic growth in emerging economies? The mediating role of institutional quality, consumption expenditure, and bank credit Biswajit Patra & Narayan Sethi To cite this article: Biswajit Patra & Narayan Sethi (2024) Does digital payment induce economic growth in emerging economies? The mediating role of institutional quality, consumption expenditure, and bank credit, Information Technology for Development, 30: 1, 57-75, DOI: 10. 1080/02681102 .2023.2244465 To link to this article: [https://doi.org/10.1080/02681](https://doi.org/10.1080/02681)102.2023.2244465 Published online: 01 Sep 2023. | Submit your article to this journal | | | --- | --- | | | Article views: 964 | | | View related articles | | View Crossmark data | | | Citing articles: 21 View citing articles | | Full Terms & Conditions of access and use can be found at [https://www.tandfonline.com/action/journalInformation?journalCode=titd20](https://www.tandfonline.com/action/journalInformation?journalCode=titd20) Does digital payment induce economic growth in emerging economies? The mediating role of institutional quality, consumption expenditure, and bank credit Biswajit Patra a and Narayan Sethib aDepartment of Economic Sciences, Indian Institute of Science Education and Research (IISER) Bhopal, Bhopal, India; bDepartment of Humanities and Social Sciences, National Institute of Technology Rourkela, Rourkela, India ABSTRACT This paper analyzes the direct and interactive eﬀect of digital payments through institutional quality, consumption expenditure, and bank crediton economic growth for 25-member countries of the Committee on Payments and Market Infrastructures (CPMI) for 2012–2020 . Using the Fixed Eﬀect with Driscoll-Kraay Panel Corrected Estimators, it ﬁnds that a rise in digital payments positively impacts economic growth. The interaction eﬀect of digital payments with other variables does not promote economic growth. To address diﬀerences among the selected countries and to have a robust analysis, the paper classiﬁed the selected countries into quantiles based on the GDP per capita level using the Bootstrapped Panel-Quantile Regression (BPQR) method. The BPQR conﬁrms the positive relationship among digital payments, institutional quality, and consumption expenditure with economic growth, whereas credit impacts it negatively. Control variables, such as inﬂation, exchange rate, health, and unemployment, behave as per economic theories related to economic growth. KEYWORDS Digital payment; economic growth; institutional quality; consumption expenditure; bank credit Subject classiﬁcation codes: G21; O43; E21; E51 1. Introduction The world is experiencing developments in digital space. There are many recent trends in the digital space, such as automation, digital banking, artiﬁcial intelligence, 5G, and mobile payment systems. The integrations ofthis bring the digital economy. The ﬁnancial markets are the great beneﬁciaries of this digital evolution. The world has experienced a continuous rise in the use of digital technology in the payment systems of the ﬁnancial markets (Hartmann, 2006; Rahman et al., 2020) . There is a continuous thrust by the governments of many parts of the world to enhance the cashless economy from the use of physical cash one. As per the latest data published by the Bank for International Settlements (BIS), Sweden has the lowest banknotes and coins in circulation (around 1%) among the member countries of the Committee on Payments and Market Infrastructures (CPMI) as a percentage of their gross domestic product (CPMI Brief No 1, 2023) . Many other countries, such as Norway, Canada, Australia, France, Finland, Denmark, the US, and the UK, are

FAQs

What is the main question addressed in the paper?

Whether digital payments induce economic growth in emerging economies, and how institutional quality, consumption expenditure, and bank credit mediate that relationship.

What does the Fixed Effects with Driscoll-Kraay Panel Corrected Estimators show?

A rise in digital payments positively impacts economic growth, while the interaction effects with other variables do not promote growth.

How does the BPQR method contribute to the analysis?

It classifies countries into GDP per capita quantiles and confirms the positive relationships among digital payments, institutional quality, and consumption expenditure, while bank credit impacts growth negatively.

Oct 23, 2026

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