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Bank Health Concerns, Low Interest Rates, and Money Demand: Evidence from the Public Opinion Survey on Household Financial Assets and Liabilities

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Author Info

  • Hiroshi Fujiki

    (Director and Senior Economist, Institute for Monetary and Economic Studies, Bank of Japan (E-mail: hiroshi.fujiki@boj.or.jp))

  • Etsuro Shioji

    (Associate Professor, Graduate School of Economics, Hitotsubashi University (E-mail: shioji@econ.hit-u.ac.jp))

Abstract

This paper uses household survey data that cover the period from 2001 through 2003 to study the cash and deposits demand of households. These data enable us to obtain empirical findings that could not previously be derived through analyses using conventional macroeconomic time-series data. First, for asset demand, we find that the fluctuations in the extensive margin (the decisions on whether or not to hold a financial product) are sometimes more important than the fluctuations in the intensive margin (the decisions on the amounts of the financial product held). Second, we conduct detailed analyses on the causes of fluctuations in the cash demand of individual households. Third, thanks to qualitative questions in our dataset, we manage to distinguish between the fluctuations in asset demand due to low interest rates and those in response to various measures that are aimed at enhancing the safety of household savings. Fourth, we quantify the economic effects of personal financial education.

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File URL: http://www.imes.boj.or.jp/research/papers/english/me24-2-4.pdf
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Bibliographic Info

Article provided by Institute for Monetary and Economic Studies, Bank of Japan in its journal Monetary and Economic Studies.

Volume (Year): 24 (2006)
Issue (Month): 2 (November)
Pages: 73-124

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Handle: RePEc:ime:imemes:v:24:y:2006:i:2:p:73-124

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Related research

Keywords: Money demand; Low interest rates; Concern for the soundness of private financial institutions; Micro data; Self-selection bias; Personal financial education; Extensive margin; Intensive margin;

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References

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  1. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  2. Perraudin, William R. M. & Sorensen, Bent E., 2000. "The demand for risky assets: Sample selection and household portfolios," Journal of Econometrics, Elsevier, vol. 97(1), pages 117-144, July.
  3. King, Mervyn A. & Leape, Jonathan I., 1998. "Wealth and portfolio composition: Theory and evidence," Journal of Public Economics, Elsevier, vol. 69(2), pages 155-193, June.
  4. Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-62, March.
  5. Diamond, Douglas W & Dybvig, Philip H, 1983. "Bank Runs, Deposit Insurance, and Liquidity," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 401-19, June.
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Citations

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Cited by:
  1. Hiroshi Fujiki & Cheng Hsiao, 2008. "Aggregate and Household Demand for Money: Evidence from Public Opinion Survey on Household Financial Assets and Liabilities," IMES Discussion Paper Series 08-E-17, Institute for Monetary and Economic Studies, Bank of Japan.
  2. Hiroshi Fujiki & Naohisa Hirakata & Etsuro Shioji, 2012. "Aging and Household Stockholdings: Evidence from Japanese Household Survey Data," IMES Discussion Paper Series 12-E-17, Institute for Monetary and Economic Studies, Bank of Japan.
  3. Hiroshi Fujiki & Migiwa Tanaka, 2009. "Demand for Currency, New Technology and the Adoption of Electronic Money: Evidence Using Individual Household Data," IMES Discussion Paper Series 09-E-27, Institute for Monetary and Economic Studies, Bank of Japan.

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