Synergy of digitalization of payments and development of MSMEs: A strategy to promote regional equality of the Sumatra province economy

Riyanto, Feri Dwi (2022) Synergy of digitalization of payments and development of MSMEs: A strategy to promote regional equality of the Sumatra province economy. Bank Indonesia Jawa Timur, Surabaya, Jawa Timur. (Submitted)

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Abstract

The aim of the research is investigating the impact of the financial inclusion index and digitalization of payments in Micro, Small and Medium Enterprises (MSMEs) on economic growth and equality. This research also carries out simulations (policies) for developing MSMEs to encourage economic growth in Sumatra Province. This research consists of four blocks of variables: 1) the impact of the real sector economy as the dependent variable block. Meanwhile, the independent blocks are 2) MSME performance block; 3) MSME capital block; and 4) digitalization and financial inclusion simulation block. The digitalization and financial inclusion simulations include e-commerce digitalization simulations, payment digitalization simulations, financial inclusion index simulations, and technology development index simulations. This research uses a quantitative approach with panel data covering 2015 to 2022 in 10 provinces on the island of Sumatra. Generalized Method of Moments (GMM) is used as an analysis method. The research results show that both the MSME performance block and the MSME capital block contribute to the acceleration of MSMEs and economic growth in Sumatra Province. This also has an impact on reducing inequality and poverty. Furthermore, the simulation results show that digitalization of e-commerce and digitalization of payments will increase economic growth, reduce poverty and inequality, but will have no impact on reducing unemployment. The financial inclusion index and Technology Development Index have an impact on accelerating MSME growth which has an impact on the real sector. With the results of the financial inclusion index and technological development index, it is increasingly massive, encouraging more inclusive growth and reducing poverty and regional economic inequality. These results can be used as material for consideration by the government in formulating policies and strategies for developing financial digitalization and MSMEs in Sumatra Province.

Item Type:	Other
Keywords:	e-commerce digitization; financial digitalization, MSMEs; economic equality; Sumatra.
Subjects:	14 ECONOMICS > 1401 Economic Theory > 140102 Macroeconomic Theory 14 ECONOMICS > 1403 Econometrics
Divisions:	Faculty of Economics > Department of Management
Depositing User:	Feri Dwi Riyanto
Date Deposited:	16 Nov 2023 10:18

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