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Currency demand, new technology, and the adoption of electronic money: Micro evidence from Japan

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  • Fujiki, Hiroshi
  • Tanaka, Migiwa

Abstract

We estimate currency demand functions conditional on electronic money adoption with household-level survey data from Japan under an Instrumental Quantile Regression framework. Contrary to theoretical predictions, our results suggest that users of electronic money hold more currency than non-users.

Suggested Citation

  • Fujiki, Hiroshi & Tanaka, Migiwa, 2014. "Currency demand, new technology, and the adoption of electronic money: Micro evidence from Japan," Economics Letters, Elsevier, vol. 125(1), pages 5-8.
    • Handle: RePEc:eee:ecolet:v:125:y:2014:i:1:p:5-8
    DOI: 10.1016/j.econlet.2014.07.032
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    1. Orazio P. Attanasio & Luigi Guiso & Tullio Jappelli, 2002. "The Demand for Money, Financial Innovation, and the Welfare Cost of Inflation: An Analysis with Household Data," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 317-351, April.
    2. Lippi, Francesco & Secchi, Alessandro, 2009. "Technological change and the households' demand for currency," Journal of Monetary Economics, Elsevier, vol. 56(2), pages 222-230, March.
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    6. Helmut Stix, 2004. "How Do Debit Cards Affect Cash Demand? Survey Data Evidence," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 31(2), pages 93-115, June.
    7. Gene Amromin & Sujit Chakravorti, 2007. "Debit card and cash usage: a cross-country analysis," Working Paper Series WP-07-04, Federal Reserve Bank of Chicago.
    8. Ben Fung & Kim Huynh & Leonard Sabetti, 2012. "The Impact of Retail Payment Innovations on Cash Usage," Staff Working Papers 12-14, Bank of Canada.
    9. Victor Chernozhukov & Christian Hansen, 2005. "An IV Model of Quantile Treatment Effects," Econometrica, Econometric Society, vol. 73(1), pages 245-261, January.
    10. Hiroshi Fujiki & Etsuro Shioji, 2006. "Bank Health Concerns, Low Interest Rates, and Money Demand: Evidence from the Public Opinion Survey on Household Financial Assets and Liabilities," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 24(2), pages 73-124, November.
    11. Chernozhukov, Victor & Hansen, Christian, 2008. "Instrumental variable quantile regression: A robust inference approach," Journal of Econometrics, Elsevier, vol. 142(1), pages 379-398, January.
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    Citations

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    Cited by:

    1. Fujiki, Hiroshi & Tanaka, Migiwa, 2017. "Choice of payment instrument for low-value transactions in Japan," International Cash Conference 2017 – War on Cash: Is there a Future for Cash? 162909, Deutsche Bundesbank.
    2. Sumei Luo & Guangyou Zhou & Jinpeng Zhou, 2021. "The Impact of Electronic Money on Monetary Policy: Based on DSGE Model Simulations," Mathematics, MDPI, vol. 9(20), pages 1-26, October.
    3. Ueda, Kozo, 2024. "Effects of bank branch/ATM consolidations on cash demand: Evidence from bank account transaction data in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 71(C).
    4. Naili Farida & Elia Ardyan & Nuryakin, 2016. "Gender Differences in Interest in Using Electronic Money: An Application of Theory Planned Behavior," International Review of Management and Marketing, Econjournals, vol. 6(4), pages 898-903.
    5. Tobias Trütsch, 2020. "The impact of contactless payment on cash usage at an early stage of diffusion," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 156(1), pages 1-35, December.
    6. Zhu, Jialiang & Liu, Yun & Fang, Ying, 2023. "A blessing in disguise—The effect of China’s Covid-19 health code system on older people’s mobile payment usage," Finance Research Letters, Elsevier, vol. 53(C).
    7. Augustine Ujunwa & Emmanuel Onah & Angela Ifeanyi Ujunwa & Chinwe R Okoyeuzu & Ebere Ume Kalu, 2022. "Financial innovation and the stability of money demand in Nigeria," African Development Review, African Development Bank, vol. 34(2), pages 215-231, June.
    8. Naili Farida & Elia Ardyan & Nuryakin, 2016. "Gender Differences in Interest in Using Electronic Money: An Application of Theory Planned Behavior," International Review of Management and Marketing, Econjournals, vol. 6(4), pages 898-903.
    9. Hiroshi FUJIKI & Kiyotaka Nakashima, 2019. "Cash Usage Trends in Japan: Evidence Using Aggregate and Household Survey Data," Working Papers e131, Tokyo Center for Economic Research.
    10. Zhao, Chunkai & Wu, Yaqian & Guo, Jianhao, 2022. "Mobile payment and Chinese rural household consumption," China Economic Review, Elsevier, vol. 71(C).
    11. Fujiki, Hiroshi & Tanaka, Migiwa, 2018. "How do we choose to pay using evolving retail payment technologies? Evidence from Japan," Journal of the Japanese and International Economies, Elsevier, vol. 49(C), pages 85-99.

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    More about this item

    Keywords

    Currency demand; Transaction demand for money; Electronic money; Instrumental quantile regression; Retail payment;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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