Impact of cashless bank payments on economic growth: Evidence from G7 countries

Abstract

Purpose: This paper examines the impact of cashlessbankpayments on the economic growth of G7 countries, namely Canada, Germany, Japan, France, Italy, the United Kingdom and the United States. Design/methodology/approach: The paper employed annual data from 2012 to 2020 and the latest Panel ARDL model to examine the relationshipdescribed above. Findings: The study's findings suggest that in the long run the cashless mode of payments considered in this study, which includes card & e-money, credit transfer and cheque, have a strong positive relationship withthe real GDP of G7 countries.In the short run, card & e-money and cheque payments positively and significantly affect the real GDP. Credit transfer is found to have an insignificant relationship in the short run. Originality/value: As the world is moving towards digitization and a cashless economy, the impact of cashless payments and digital finance is becoming an important topic for researchers. Further, existing literature focused only on European Countries that used traditional methodologies and provided mixed results. Therefore, this study aims to extend the existing literature in context of G7 countries by employing latest Panel ARDL model. Practical implications:This study is beneficial for policymakers, in particular, of G7 countries, as it indicates the role of digitization and cashless payments in the growth and development of the economy.