A MEDIATING EFFECT OF DEMONETIZATION OF CURRENCY NOTES TOWARDS ADOPTING CASHLESS PAYMENT SYSTEM

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International Journal of Civil Engineering and Technology (IJCIET) Volume 8, Issue 6, June 2017, pp. 699 707, Article ID: IJCIET_08_06_075 Available online at http://www.iaeme.com/ijciet/issues.asp?

1 International Journal of Civil Engineering and Technology (IJCIET) Volume 8, Issue 6, June 2017, pp , Article ID: IJCIET_08_06_075 Available online at ISSN Print: and ISSN Online: IAEME Publication Scopus Indexed A MEDIATING EFFECT OF DEMONETIZATION OF CURRENCY NOTES TOWARDS ADOPTING CASHLESS PAYMENT SYSTEM M. Bhuvana PhD Research Scholar, School of Management Studies, Vels University, Chennai, India Dr. S.Vasantha Professor, School of Management Studies, Vels University, Chennai, India ABSTRACT Objective: Demonetization is defined as the act of devastating, a currency unit of its level as legitimate tender. It happens whenever there is a modification in national currencies. Demonetization of high value currency notes is one of the memorable economic occurrences in our country. This study has done an investigation on the drivers that determines the usage of Cashless Payment System among the people in Chennai city. The study has examined the cause & effect relationship between the study variables and analyzed the mediating effect of demonetization of high value currency notes between attitude and behavioral intention to use cashless payment system. Methods: The study has adopted Technology Acceptance Model (TAM) for constructing Theoretical Framework. This theory explains the user s acceptance of new system or technology with an existence of various factors that have a greater impact about how to use the technology. Findings: The study has highlighted that Perceived Usefulness, Perceived Ease of Use and attitude are the observed variables for the behavioral intention of the people to utilize cashless payment systems. The study findings have displayed the model fit. For examining cause and effect relationship between the independent, mediating and dependent variable Structural Equation Modeling has been done. The study has been found out that demonetization of high value currency notes is partially mediating the relationship between attitude and Behavioral intention of people for accessing cashless payment systems. Improvement: This paper has proposed Demonetization of Currency notes as a mediating variable in technological acceptance model. This finding has enables that Demonetization of Currency notes has increased the usage of cashless banking system. Traditionally, online transactions were done either by providing debit and editor@iaeme.com

2 M. Bhuvana and Dr. S.Vasantha credit card details or through net banking interfaces. Still there are issues like security and payment experience was not user- friendly has to taken under consideration for further improvements. Key words: Cashless Payment System, Demonetization, Technological Acceptance Model. Cite this Article: M. Bhuvana and Dr. S.Vasantha, A Mediating Effect of Demonetization of Currency Notes towards adopting Cashless Payment System. International Journal of Civil Engineering and Technology, 8(6), 2017, pp INTRODUCTION The demonetization of the elevated denomination currency notes is a bit of various estimated managed by the government to label counterfeit currency, tax evasion and funding of illegal activities. The demand to deposit currency notes in surplus of identified limits directly into bank accounts has evolved in the statement of formally unaccounted income, issue to higher tax and alternative penalties. India has one of the greatest levels of currencies in transmission over 12% of GDP and of this cash, in the form of Rs 500 and Rs 1,000 notes at 87%. Universally, this is not uncommon as the central banks of many countries force huge amounts of cash into the economy, predominantly in very huge denominations. Promoting speedy payment services, the payments eco-system in the country facilitates numerous alternatives to various segments of users for funds transfer as well as for doing payments in interchange of value for services and goods. With increasing adoption of e-payments, especially those operating m-commerce and e-commerce, there is an originating demand for speedy payment services which, in turn, provides ease in making money transactions. 2. OBJECTIVES 1. To determine the drivers for adopting Cashless Payment System 2. To analyze the cause and effect relationship between the variables using Structural Equation Modeling (SEM). 3. To analyze the Mediating effect of Demonetization of high value currency notes towards adopting Cashless Payment System Drivers for adopting Cashless Payment System Behavioral Beliefs The technology acceptance literature provides the forecast of usage by associating behaviors to attitudes and beliefs (Perceived usefulness and Perceived ease of use) that are stable in time, Objective, and background with the behavior of scrutiny (system usage). The paper also developed a model that directly differentiated the object-based beliefs and attitudes established in the literature of user satisfaction from attitudes and behavioral beliefs in the technology acceptance literature Perceived Usefulness Perceived Usefulness is defined as the impudence of an individual or a person that their work attainment will be reinforced by using a particular system 1. The study has done an investigation on user s acceptance on e- payment system in the sector of Indian Banking. The study has analysed the factors that influences the customer s adoption on electronic payment system such as NEFT, RTGS, debit card and credit card. The research study has adopted editor@iaeme.com

3 A Mediating Effect of Demonetization of Currency Notes towards adopting Cashless Payment System Technological Acceptance Model for measuring the conceptual framework. The researchers had concluded that Perceived Usefulness has the positive effect on user acceptance towards electronic payment 2. Another study has examined the impact of perceived usefulness on attitude and behavioral intention on online shopping among the students. 200 respondents has taken as a sample for the study. The study has concluded that perceived usefulness has no signficant relationship towards towards attitude of students towards online shopping. The data has been measured and analysed by using Structural Equation Modeling and have taken Technological Acceptance Model as the base theory Perceived Ease of Use Perceived Ease of Use is described as the degree to which person or an individual suspects that by using a certain technology would be free of Endeavour. According to technological acceptance model, Perceived Ease of Use has an indirect effect towards attitude and behavioral intention to use the technology by the users 4. The study has ranked three different payment systems in the country of Nigeria by constructing a Technological Acceptance Model by using framework of Perceived Ease of Use. The study has ranked e payment as first towards perceived ease of use by comparing with other payment systems such as payment through cash and cheque payment system 5. Another Study has examined that factors that has a greater influence on purchase intention towards online environment. The researchers have found that perceived ease of use has an effect of significance towards purchase intention among the customers for online shopping Attitude Attitude is defined as an idea that has been inspected and determined by someone s behavior 7. Attitude is defined as the negative and positive feelings of an individual about accomplishing a designated behavior 8. The study has attempted to measure the attitude of customers towards electronic banking system in Rajasthan and Jaipur. The study has done a chi-square test analysis to find the association between awareness of customers towards electronic banking. The researchers have concluded that risk is a major factor that affects the attitude of customer towards accessing electronic banking among the respondents in Rajasthan and Jaipur 9. Another study has measured the customer satisfaction through attitude of bank customers towards E- Banking in Ghana. The researcher has concluded the study by stating that the customers are satisfied with the use of electronic banking services and also the study has highlighted that about 197 respondents has responded that they use ATM as their electronic banking services for making their transactions Behavioral Intention Theory of Planned Behavior determines behavioral intention as the future behavior of an individual for accessing a particular system 11. A study has done an investigation on intention towards using online bill payment among the students of MBA department in the University of Malaysia. The researchers have adopted TAM2 and Social Cognitive Theory for constructing the framework. The result of this study has revealed that Perceived Usefulness and Perceived Ease of Use are the significant drivers of intention to utilize online payment system among the MBA students 12. Another study has done an investigation on customer intention for adopting Mobile payment services among the customers in Thailand. The study has adopted extended TAM model along with adding cultural dimensions constructs for developing conceptual framework. The proposed framework was measured using Structural Equation Modeling (SEM) for testing the hypothesis. The study has highlighted that the two construct namely Perceived Usefulness and Perceived Ease of Use does not have a direct editor@iaeme.com

4 M. Bhuvana and Dr. S.Vasantha effect on behavioral intention for accessing Mobile banking services among the customers in Thailand Demonetization Demonetization is defined as the act of devastating, a currency unit of its level as legitimate tender. It happens whenever there is a modification in national currencies. The present form of currency is levered from retired and circulation, frequently to be replaced with fresh notes or coins. Periodically, a country entirely replaces the elderly currency into new currency 14. Demonetization is continuous shift to a cashless economy with a considerable focus on electronic fund transactions is being predicted. Increase in use of debit or credit cards, Internet Banking and other payment systems will be a positive result of demonetization, as those would not only help for earning fee income and also decreases the transaction costs 15. The growth of credit cards and debit cards for money transactions has been made by the projection of plastic money RESEARCH METHODOLOGY 3.1. Sampling Techniques The behavioral intention of customers towards cashless payment system has been studied by applying well defined structured questionnaire. The study comprises of two dependent variables such as Behavioral Beliefs and Attitude. The Construct called Demonetization is a mediating variable of this study. There are totally 30 items in this research study. The bank customers in Chennai are taken as a sample for this study. The study has appropriated with Simple random sampling techniques. The Research Study has adopted Descriptive Research Design Data Collection The Primary Data for this study has been collected from the nearly 400 bank customers in Chennai. Demographic profile of the respondents has been shown in Table [1]. The bank customers have been selected randomly and the questionnaire has been circulated with the group of respondents. For analyzing the primary data SPSS (Statistical Package of Social Sciences) has been used. For analyzing the validity of the questionnaire framed, Reliability test has been conducted and the value was found to be To analyze the association between study variables Structural Equation Modeling (SEM) has been carried out by using SPSS AMOS 21. Table 1 Demographic Profile of the Respondents Demographic Variables Frequency Percentage Age Group Above Gender Male Female editor@iaeme.com

5 A Mediating Effect of Demonetization of Currency Notes towards adopting Cashless Payment System Demographic Variables Frequency Percentage Level of Education Primary Secondary Graduates Occupation State Government Employee Private Employee Self Employed Central Government Employee Others Annual Income <1 Lakh 1Lakh 5 Lakh >5 Lakh Data Analysis & Results Hypothesis The significant association between the constructs has been shown in Table [2] H1: Behavioral Beliefs is positively associated with attitude Accepted H2: Behavioral Beliefs is positively associated with Demonetization Accepted H3: Attitude is positively associated with Demonetization Accepted H4: Attitude is positively associated with Behavioral Intention Accepted H5: Demonetization is positively associated with Behavioral Intention Accepted Dependent Variable Independent Variable Table 2 Regression Weights Unstandardized Coefficient S.E. Standardized Coefficient t- value Attitude <--- Behavioral Beliefs <0.001 Demonetization <--- Behavioral Beliefs <0.001 Demonetization <--- Attitude <0.001 Behavioral Intention <--- Attitude <0.001 Behavioral Intention <--- Demonetization <0.001 Table [2] displays the Critical Ratio (t- value) is as high as in absolute value lesser than The coefficient of Behavioral beliefs is 0.465, that implies the positive effect on attitude and this coefficient value is significant at 1% Level. The coefficient of Behavioral Beliefs is 0.80, that implies the positive effect on Demonetization and this coefficient value is significant at 1% Level. The Coefficient of Attitude is 0.540, that implies the positive effect on Demonetization and this coefficient value is significant at 1% Level. The coefficient of Attitude is 0.517, that implies the positive effect on Behavioral Intention and this coefficient value is significant at 1% Level. The Coefficient of Demonetization is 0.389, that implies the positive effect on Behavioral Intention and this coefficient value is significant at 1% Level. 4. MODEL FIT ASSESSMENT To inspect the causal relationship at the variables in the study and to establish the assessed model fit shown in figure 1, Structural Equation Modeling (SEM) has been used. Significance has been tested by the values of Goodness of Fit Index (GFI), RMR (Root Mean Square P editor@iaeme.com

6 M. Bhuvana and Dr. S.Vasantha Residual), Adjusted Goodness of Fit Index (AGFI), Root mean square error of approximation (RMSEA), Probability Value (P-Value), Comparative Fit index (CFI), and Chi-Square (CMIN/DF). Table [3] summated that the P- Value of Chi Square is (>0.05) and it regulated the Model Fit. The Values of TLI, IFI, GFI, AGFI, NFI and CFI are more than 0.90 and it determines the goodness of fit. The Values of RMR & RMSEA are smaller than 0.08 that suggests the Model Fit. Figure 1 Proposed Model of Structural Equation Modeling Table 3 Model Fit Summary Fit Indices Results Suggested values Chi-square/degree of freedom (x2/d.f.) (Hair et al., 1998) P value >0.05(Hair et al., 1998 Comparative Fit index (CFI) >0.90 (Hu and Bentler, 1999) Goodness of Fit Index (GFI) >0.90 ( Hair et al. 2006) Adjusted Goodness of Fit Index (AGFI) > 0.90 (Daire et al., 2008) Normated Fit Index ( NFI) (Hu and Bentler, 1999) Incremental Fit Index (IFI) Approaches 1 Tucker Lewis Index (TLI) ( Hair et al., 1998) RMR <0.08 Root mean square error of approximation (RMSEA) < 0.08 ( Hair et al., 2006) 5. MEDIATING EFFECT Mediation is said to be persisted only when the direct path linking the dependent and independent variable reduces, when the indirect path between the mediators is formulated in the model. Fig [2] shows that the direct path is evaluated without extension of the mediator and with the extension of the mediator was the standardized beta value shown in Table [5] and besides instigating the mediation, the beta value altered to shown in Table [6]. The increase in the Total value of Behavioral intention from 0.44 to 0.58 in association between attitude and behavioral intention is considered by the Mediator called Demonetization editor@iaeme.com

7 A Mediating Effect of Demonetization of Currency Notes towards adopting Cashless Payment System Figure 2 Attitude and Behavioral Intention- Direct Effect Table 5 Standardized Regression Weights: Dependent Variable Independent Variable Estimate Behavioral Intention <--- Attitude Figure 3 shows the Significance of Mediation Effect and was measured by employing from Sobel test with the technique of bootstrapping application in which a particular model with both indirect [Table (8)] and direct paths [Table (7)] will be incorporated. Table [10] describes the Total effect of the study variables and highlights the significance at 0.01(two tailed). This shows that Demonetization partially mediates the relationship between the attitude and behavioral intention. Sobel Test Figure 3 Attitude and Behavioral Intention- Indirect Effect after Mediation Table 6 Standardized Regression Weights: Dependent Variable Independent Variable Estimate Demonetization <--- Attitude Behavioral Intention <--- Attitude Behavioral Intention <--- Demonetization Table 7 Direct Effects - Two Tailed Significance Attitude Demonetization Demonetization Behavioral Intention editor@iaeme.com

8 M. Bhuvana and Dr. S.Vasantha Table 8 Indirect Effects - Two Tailed Significance Attitude Demonetization Demonetization Behavioral Intention Table 9 Total Effects - Two Tailed Significance Attitude Demonetization Demonetization Behavioral Intention DISCUSSION AND CONCLUSION The objective of this research study is to build the mediating effect of Demonetization of high value currency notes on Attitude and Behavioral Intention of people for accepting cashless payment system. The study has confirmed the causal relationship between the study variables such as Behavioral Beliefs, Attitude, Behavioral Intention and Demonetization. The Model has divulged that Attitude has a positive and significant effect on Behavioral Intention. Demonetization has been adjoined as a Mediating Variable between Attitude and Behavioral Intention. The Proposed Model has been factually analyzed and the direct association between the variables is ratified. The association between attitude and behavioral intention is confirmed. The direct path coefficient between attitude and Behavioral Intention is and it is significant. The Indirect path coefficient between Demonetization and Behavioral Intention is and it is significant. Thus the study has examined the mediating effect of Demonetization on attitude and Behavioral Intention. The increase in the Total value of Behavioral intention from 0.44 to 0.58 in association between attitude and behavioral intention is considered by the Mediator called Demonetization. This shows that Demonetization partially mediates the relationship between attitude and behavioral intention 18. The findings from the study has enabled that demonetization of high value currency notes has increased the acceptance of cashless payment system among the respondents. High quality of cashless payment systems with best practices has to be built by the government and people have been practiced for adopting cashless payment systems. REFERENCES [1] Barbara H. WIXom, Peter A. Todd, A Theoretical Integration of User Satisfaction and Technology Acceptance, Vol. 16, No.1, March 2005, pp [2] Davis, F.D., Perceived usefulness, perceived ease of use and user acceptance of information technology. MIS Quarterly, 13: [3] Sanghita Roy, Dr. Indrajit Sinha, Determinants of Customers Acceptance of Electronic Payment System in Indian Banking Sector A Study, International Journal of Scientific & Engineering Research, Volume 5, Issue 1, January ISSN [4] Juniwati, Influence of Perceived Usefulness, Ease of Use, Risk on Attitude and Intention to Shop Online, European Journal of Business and Management, ISSN (Paper) ISSN (Online), Vol.6, No.27, [5] Igbaria, M., Zinatelli, N., Cragg, P., & Cavaye, A. L. M. (1997). Personal computing acceptance factors in smallfirms: A structural equation model. MIS Quarterly, 21(3), editor@iaeme.com

9 A Mediating Effect of Demonetization of Currency Notes towards adopting Cashless Payment System [6] Clement Ikenna Okeke, Pereived Ease of Use (PEOU) And Ranking of Payment Systems in Nigeria: Case for systems Cannibalization, IOSR Journal of Business and Management (IOSR-JBM) e-issn: X, p-issn: Volume 16, Issue 3. Ver. IV (Feb. 2014), PP [7] Yoon C. Cho, Exploring Factors That Affect Usefulness,Ease Of Use, Trust, And Purchase IntentionIn The Online Environment, International Journal of Management & Information Systems First Quarter 2015 Volume 19, Number 1. [8] Kardes, F. R Consumer Behavior and Managerial Decision Making Second Edition. Upper Saddle River,New Jersey. Pearson Education, Inc. [9] Fishbein, M. & Ajzen, I. (1975). Belief, attitude, intention and behavior: An introduction to theory and research. Reading, MA: Addison-Wesley. [10] Yogesh Kumawat, Customers Attitude towards E-Banking System in Rajasthan, IOSR Journal of Business and Management (IOSR-JBM) e-issn: X, p-issn: Volume 16, Issue 9.Ver. III (Sep. 2014), PP [11] Martin Anane Felix Oppong Asamoah, Customers Satisfaction and Attitude towards Electronic Banking Services in Ghana: A Case Study of Selected Banks in Kumasi Metropolis, European Journal of Business and Management, ISSN (Paper) ISSN (Online), Vol.7, No.32, 2015 [12] Ajzen, I. (1991). The theory of planned behavior. Organizational Behavior and Human Decision Processes, 50, [13] Yeow, P. H. P., Wong, C. C., Lai, N. T., Keok, C. H. and Tan, H. M. (2004). Online Purchasing Behaviour of Malaysian tertiary Education Students (MTES), Multimedia Cyberscape Journal, 2(1), [14] Alireza Chavosh, Anahita Bagherzad Halimi, and Shahriar Espahbodi, Comparing The Satisfaction with The Banks E-payment Services between Degree Holder and Non-Degree Holder Customers in Penang-Malaysia, International Journal of e-education, e-business, e-management and e-learning, Vol. 1, No. 2, June, 2011 [15] [16] Manpreet Kaur, DEMONETIZATION: IMPACT ON CASHLESS PAYEMNT SYSTEM, 6th International Conference on Recent Trends in Engineering, Science and Management, ISBN: , 8th January 2017 [17] Annamalai, S. and Iiakkuvan R. Muthu. (2008). Retail Transaction: Future Bright for Plastic Money, Facts of You, May, pp [18] Baron, R. M., & Kenny, D. A. (1986), The moderator mediator variable distinction in social psychological research conceptual, strategic, and statistical consideration. Journal of Personality and Social Psychology, (51:6): [19] Hair, J. F., Black, W. C., Basin, B. J. &erson, R. E. (2010). Multivariate data Analysis. (7thed.). New Jersey: Upper Saddle River, Pearson Prentice Hall. [20] Hu LT, Bentler PM (1999). Cutoff Criteria for Fit Indexes in Covariance Structure Analysis: Conventional Criteria versus New Alternatives, Struct. Equ. Model. 6(1):1-55. [21] Dr. Subramanian.S, Paper- Free Payment Systems In India-An Analytical Study, Volume 5, Issue 1, January (2014), pp , International Journal of Management (IJM) [22] Dr. P. Abirami and S. Senthil Kumar, Electronic Payment SystemsTechnical and Strategic Issues. International Journal of Management, 8 (2), 2017, pp [23] Daire H, Joseph C, Michael RM (2008). Structural Equation Modeling: Guidelines for Determining Model Fit. Electron. J. Bus. Res. Methods 6(1): editor@iaeme.com

International Journal of Business and Administration Research Review, Vol. 3, Issue.11, July - Sep, Page 48

International Journal of Business and Administration Research Review, Vol. 3, Issue.11, July - Sep, Page 48 A STUDY ON CUSTOMER SERVICE SYSTEM IN TAMIL NADU TRANSPORT DEPARTMENT AT SALEM CITY BY USING STRUCTURAL EQUATION MODELLING V.Jeyagowri* Dr.M.Latha Natarajan** Dr.M.Gurusamy*** *Ph.D Research Scholar in