The Impact of Financial Transactions, Economic Welfare, and Youth Demographics on Indonesia’s Economy: A Path Analysis Approach

Abstract ―​

This research examines the relationship between three indices: the Financial Transaction Index (FTI), which measures the volume and value of financial transactions in Indonesia; the Economic Well-Being Index (EWI), which measures the level and distribution of economic welfare in Indonesia; and the Youth Demographic Ratio, which measures the proportion of young people, especially Generation Z, in the population. The research applies Principal Component Analysis (PCA) and Path Analysis to analyse the data and test the hypotheses. The results show that FTI has a direct and consistent impact on financial inclusion and consumer behavior, while EWI impacts broader economic policies and indicators. The Youth Demographic Ratio, especially Gen Z, appears to be stable and not influenced by the other indices. The research provides insights into the complex dynamic of these indices and the young population and can help in understanding the implications for Indonesia's economic growth and stability.