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One of the most noteworthy benefits that new technological opportunities bring to economies is Financial technologies (FinTech), which makes it easier for financial services to be cheap, fast, and accessible, especially by creating more digital payment services. This high rate of digitalization in payment services changes the liquidity preferences of economic agents daily and may affect the demand for central bank money. However, the prerequisite for the central bank to carry out monetary policy and be effective is accurately predicting the demand for its own money. Therefore, the developments in FinTech, in the last decade, are among the most attention-grabbing issues for demand in money, as well as being in the leading position for central banks, which followed intimately. In this context, the aim of this study is to reveal the impacts of developments in FinTech on monetary policy for Türkiye’s real money demand. For this purpose, in order to represent the developments in financial technologies, The FinTech index, which is formed for the first time in the relevant economy using the PCA method over the period 2012:Q1–2021:Q4, is included in the model where national income, interest rate, exchange rate, and inflation are explanatory variables. Results from the ARDL approach show that FinTech developments and demand for money are co-integrated, and also an increase in FinTech reduces money demand both in the short and long-run. The causality analysis handled with the Toda-Yamamoto approach has revealed the existence of a bidirectional causality relationship between FinTech and money demand. Accordingly, Fintech developments in Türkiye have a huge potential to shape economic agents’ liquidity preferences. To maintain the effectiveness of monetary policy, the policymakers in the central bank should closely follow FinTech developments and supervise and regulate activities that will create an alternative to its currency.
One of the most noteworthy benefits that new technological opportunities bring to economies is Financial technologies (FinTech), which makes it easier for financial services to be cheap, fast, and accessible, especially by creating more digital payment services. This high rate of digitalization in payment services changes the liquidity preferences of economic agents daily and may affect the demand for central bank money. However, the prerequisite for the central bank to carry out monetary policy and be effective is accurately predicting the demand for its own money. Therefore, the developments in FinTech, in the last decade, are among the most attention-grabbing issues for demand in money, as well as being in the leading position for central banks, which followed intimately. In this context, the aim of this study is to reveal the impacts of developments in FinTech on monetary policy for Türkiye’s real money demand. For this purpose, in order to represent the developments in financial technologies, The FinTech index, which is formed for the first time in the relevant economy using the PCA method over the period 2012:Q1–2021:Q4, is included in the model where national income, interest rate, exchange rate, and inflation are explanatory variables. Results from the ARDL approach show that FinTech developments and demand for money are co-integrated, and also an increase in FinTech reduces money demand both in the short and long-run. The causality analysis handled with the Toda-Yamamoto approach has revealed the existence of a bidirectional causality relationship between FinTech and money demand. Accordingly, Fintech developments in Türkiye have a huge potential to shape economic agents’ liquidity preferences. To maintain the effectiveness of monetary policy, the policymakers in the central bank should closely follow FinTech developments and supervise and regulate activities that will create an alternative to its currency.
No abstract
Subject. The article addresses the dynamics of the largest economies’ financial sector structure in terms of long-term trends and current challenges. Objectives. The aim is to identify patterns of changes in the financial sector structure that are common to developed economies, and to trace what imbalances threaten the financial sector at present. Methods. The study rests on the methods for analyzing the structure of the financial sector. The main indicators are based on the indicator of assets of financial intermediaries, and the indicator of the volume of debt markets (loans, bonds) and stock markets. Furthermore, the elements of comparative cross-country analysis are used. Results. The paper reveals the main trends in the analysis of the structure of financial sectors of the eurozone countries and the United States, and some trends related to the Japanese economy. It shows that changes in the structure of the USA financial sector began with financial liberalization in the 1980s, and led to a radical reduction in the share of credit institutions in the assets of financial intermediaries. In Europe, this process was delayed for about 20 years, but has not yet led to the same changes as in the United States. Conclusions. The findings can be used by the Bank of Russia in designing a financial market development strategy aimed at a balanced structure that meets the modern economy requirements.
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