Digital Financial Transformation: The Influence of Fintech on The Stability of The Indonesian Financial System
- Huswatun Hasanah Bengkulu University, Bengkulu, Indonesia
-
Azansyah Azansyah
*
Bengkulu University, Bengkulu,
Indonesia
(*) Corresponding Author
Abstract
This research examines the influence of financial technology (fintech) on Indonesia's financial system stability using the Error Correction Model (ECM) methodology with monthly data from 2018-2023. The variables used include the bank Z-score as a proxy for financial system stability, and independent variables consisting of e-money ownership, credit cards, ATM cards, P2P lending volume, and a COVID-19 dummy variable, along with control variables for interest rates, inflation, and exchange rates. Using Stata-14 software, data analysis was conducted through a series of tests including unit root tests, cointegration tests, classical assumption tests, and ECM estimation to analyze both short-term and long-term impacts. The research findings reveal that e-money contributes positively to long-term financial stability, while ATM cards and P2P lending demonstrate negative impacts. Interestingly, the COVID-19 pandemic showed positive effects, reflecting the effectiveness of policy responses. These findings provide crucial insights for policymakers in designing regulations that balance innovation and stability in the digital financial era.
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References
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