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Some Ambiguities Concerning the Development of Electronic Money

Author

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  • Helmi Hamdi

    (Centre of Economic Analys University Paul Cezanne Aix-Marseille III Aix-en-Provence, France)

Abstract

The aim of this paper is to analyse the economic efficiency of electronic money and to identify different factors hindering its growth. It is argued that electronic money might eventually make paper money obsolete. Nevertheless, prospects for the development of this monetary innovation remain uncertain due to the complexity and ambiguity of electronic money products. In particular, the paper identifies network effects and habit persistence as major factors hindering the adoption and more widespread use of electronic money.

Suggested Citation

  • Helmi Hamdi, 2007. "Some Ambiguities Concerning the Development of Electronic Money," Financial Theory and Practice, Institute of Public Finance, vol. 31(3), pages 293-307.
    • Handle: RePEc:ipf:finteo:v:31:y:2007:i:3:p:293-307
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    File URL: http://www.ijf.hr/eng/FTP/2007/3/hamdi.pdf
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    References listed on IDEAS

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    1. Katsuhito Iwai, 1997. "Evolution of Money," CIRJE F-Series 97-F-37, CIRJE, Faculty of Economics, University of Tokyo.
    2. Humphrey, David B & Kim, Moshe & Vale, Bent, 2001. "Realizing the Gains from Electronic Payments: Costs, Pricing, and Payment Choice," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(2), pages 216-234, May.
    3. Joanna Stavins, 1997. "A comparison of social costs and benefits of paper check presentment and ECP with truncation," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 27-44.
    4. Katz, Michael L & Shapiro, Carl, 1986. "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 822-841, August.
    5. Goolsbee, Austan & Klenow, Peter J, 2002. "Evidence on Learning and Network Externalities in the Diffusion of Home Computers," Journal of Law and Economics, University of Chicago Press, vol. 45(2), pages 317-343, October.
    6. Humphrey David & Willesson Magnus & Lindblom Ted & Bergendahl Göran, 2003. "What Does it Cost to Make a Payment?," Review of Network Economics, De Gruyter, vol. 2(2), pages 1-16, June.
    7. Malte Krueger & Charles Goodhart, 2001. "The Impact of Technology on Cash Usage," FMG Discussion Papers dp374, Financial Markets Group.
    8. William P. Osterberg & James B. Thomson, 1998. "Network externalities: the catch-22 of retail payments innovations," Economic Commentary, Federal Reserve Bank of Cleveland, issue Feb.
    9. Stefan W. Schmitz, 2002. "The Institutional Character of Electronic Money Schemes: Redeemability and the Unit of Account," Macroeconomics 0211009, University Library of Munich, Germany.
    10. Sujit Chakravorti & Victor Lubasi, 2006. "Payment instrument choice: the case of prepaid cards," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 30(Q II), pages 29-43.
    11. Gerald Stuber, 1996. "The Electronic Purse: An Overview of Recent Developments and Policy Issues," Technical Reports 74, Bank of Canada.
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    Cited by:

    1. Helmi Hamdi, 2011. "Can E-Payment Systems Revolutionize Finance of the Less Developed Countries? The Case of Mobile Payment Technology," International Journal of Economics and Financial Issues, Econjournals, vol. 1(2), pages 46-53, June.

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    More about this item

    Keywords

    e-money; ICT; network externalities; habit persistence.;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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