The Impact of Modern Technology on Demand for Money in Iran

This paper examines the impact of modern technology including credit cards, automatic teller machines (ATM) and electronic funds of transfer at the Point-Of-Sale (POS) on money demand for Iran Using seasonal data for Iran 2001-2008. For this purpose, money demand function has been estimated on the basis of Rinaldian model (2001) by ARDL approach. Our findings indicate that the long-run impact of modern technology on demand for money is strongly greater than short-run. We have also shown that, as a result of increase in the number ATMs and credit cards, the demand for currency will increase in both short and long runs. Whereas the impact of increase in POS on demand for currency is negative. In addition, the error correction coefficient is 0.49 indicates that 49 percent of short-run fluctuations in money demand will be settled in long-run.