Relationship between cashless payment development and household deposits: Evidence from Kazakhstan

Type of the article: Research ArticleAbstractThe development of non-cash payments is changing the financial behavior of the population and the processes of bank deposit formation. Despite growing interest in the digitalization of the financial sector, the relationship between the growth of non-cash payments and the deposit behavior of the population remains insufficiently studied. This study aims to assess the relationship between the development of cashless payments and household deposit dynamics in Kazakhstan during 2014–2025. The study is based on official statistical data. It includes 19 indicators combined into four integrated indices characterizing the monetary system, financial stability, the development of non-cash payments, and population bank deposits. The MEREC and MARCOS methods were used to construct the composite indices. Correlation and regression analyses were then conducted, with robustness checks using alternative index construction methods, detrending, first differences, and growth rates. The obtained results showed a strong positive relationship between the development of the monetary system and the dynamics of bank deposits (r = 0.981; p < 0.001), as well as between the development of non-cash payments and bank deposits of the population (r = 0.856; p < 0.001). Regression analysis showed statistically significant associations after controlling for the time trend, with R2 = 0.966 for M_Index_4 and R2 = 0.994 for P_Index. The results support both research hypotheses and indicate a close relationship between the development of non-cash payments and household deposit dynamics, demonstrating that changes in payment practices and deposit behavior in Kazakhstan occurred in parallel during 2014–2025.