TITLE:
Review the Behavior of Cashless Transactions Regarding Economy of Sri Lanka (2010-2020)
AUTHORS:
Nammuni Arachchige Nuwan Janaka Maduwansha, Ekanayake Mudiyanselage Gimhani Prarthana Bandara Boyagoda
KEYWORDS:
Credit Card Transactions, Cashless Economy, Debit Card Transactions, Gross Domestic Product, Currency in Circulation
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.10 No.10,
September
27,
2022
ABSTRACT: The technological evolution has encouraged electronic payment methods,
which allow for the exchange of goods and services without
the usage of physical cash. The digital economy of Sri Lanka, projected to be
worth USD 3.47 billion of Gross Domestic Product (GDP), is now steadily growing
& COVID-19 pandemic with unexpected decline in the use of physical cash
could have influenced this growth. In the Sri Lankan context, there is a
tendency of expanding the use of cashless transaction methods among people.
Therefore, the research problem of this study was that whether Credit &
Debit Card Consumption, Currency in
Circulation, Internet Based Financial Transactions, influence the
economic growth of Sri Lanka. The main purpose of this study is to identify the
factors related to cashless transactions, which affect the GDP of Sri Lanka.
Required data were gathered from the Central Bank of Sri Lanka. To evaluate the
impact of COVID-19 on the digital economy, purposive sampling was done by the
researcher & obtained a sample of 44 data units, which covered the first
quarter of 2010 to the fourth quarter of 2020. Vector Error Correction Model
was implemented to determine the impact of above factors on the GDP of Sri
Lanka. Moreover, the study revealed, Currency in Circulation & Credit and
Debit Card Transactions will have a positive impact on economic growth of Sri
Lanka, while the Internet-Based Financial Transactions will have a negative
impact on economic growth in Sri Lanka for 2010-2020 by
Impulse Response Function. However, the government should raise public
awareness about the importance of digital literacy, and economic policymakers
should address the country’s advanced economic concerns associated with cashless
transactions and boost the digital economy via new solutions to make the system
more accountable and efficient in the long run.