Title: Banks' financial innovation and the demand on money

Authors: Ala' Bashayreh; Mohammad W. Alomari; Samer Abdelhadi; Naderh Mryan

Addresses: Department of Economics, The Hashemite University, Zarqa, 00962, Jordan ' Department of Economics, The Hashemite University, Zarqa, 00962, Jordan ' Department of Economics, The Hashemite University, Zarqa, 00962, Jordan ' Department of Economics, The Hashemite University, Zarqa, 00962, Jordan

Abstract: Financial innovation has come through improvement over time in financial tools and payment instruments used in the lending and borrowing of funds. This study aims at investigating the effect of electronic money on demand for money in Jordanian economy. The study uses ordinary least square (OLS) regression model to analyse a panel data over the period of (2011-2016), depending on data collecting of 13 commercial banks in Jordan. Results reveal that both GDP growth and the growth of visa cards number of each bank have positive and significant effect on the demand for money. On other hand, money demand was found to be negatively related with growth of interest rate, growth of total credit facilities granted by each bank, technological progress and utility bills paying service.

Keywords: demand on money; financial innovation; commercial banks; Jordan.

DOI: 10.1504/IJMEF.2019.100626

International Journal of Monetary Economics and Finance, 2019 Vol.12 No.3, pp.169 - 179

Received: 05 Nov 2018
Accepted: 11 Feb 2019
Published online: 05 Jul 2019 *

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