E-Money in Banking Performance Base On Absolute Income and Transformation of Money Theory in Indonesia

Abstract

The purpose of this study is to investigate how E-Money can affect credit and bank performance in Indonesia. This study only focuses on the impact of E-Money in influencing credit and bank performance. This study uses a quantitative method with threshold autoregression testing with earnings after tax as endogenous variables and for exogenous variables E-money and financing as threshold variables and third party funds as non-threshold variables. We find that bank credit or financing comes from third-party funds or it can be said that third-party funds are the key factors that affect credit or financing. So that third-party funds become a vital factor in bank performance. Credit or financing is a key factor in the Bank's performance because by doing financing or providing credit the bank can earn income. However, the results of the influence of E-Money or electronic money on bank performance are still ambiguous. Although we find that E-Money is a factor that strengthens financing in influencing bank performance with profit after tax indicators. It can be said that E-Money has the potential as an intervening variable on the effect of financing on profit after tax.