Does banking technology help in producing a cashless economy? A panel study on some selected MENA countries

Abstract

The research paper will focus on the impact of banking technology in promoting a cashless economy in some selected MENA countries, namely Algeria, Egypt, Israel, Kuwait, Morocco, and Qatar by using panel data analysis from 2004 to 2019. Additionally, we will estimate the impact of the number of automated teller machines (ATMs), mobile subscriptions (MOBs), deposit interest rate (DIR), number of banks’ branches (NBB), and education (EDU) on the cash in circulation (CIC). The methodology that the paper used started with descriptive statistics. Furthermore, a correlation analysis was conducted. Additionally, the panel unit root tests were used to check the stationarity of the variables. Besides, panel least-square analysis conducted includes the common constant, fixed, and random effects. Furthermore, GLS was conducted. Finally, the preferred model was the fixed effects with Seemingly Unrelated Regression (SUR) weights. Additionally, diagnostic tests were conducted, which includes normality and cross-section dependence. The main findings of the paper resulted that the ATMs, DIR, NBB, and MOBs promoted a cashless economy. However, the results of the EDU, illustrated that it does not promote a cashless economy. Finally, we recommend that governments of the MENA countries should encourage people to use banking technology to reduce the currency in circulation, by giving incentives for the banks to supply more cards and lowering the taxes for the banks that help them to provide ways to promote a cashless economy. Also, governments should put regulations to improve internet services to promote a cashless economy.