Is Baumol's 'square root law' still relevant? evidence from micro-level data
AbstractThe purpose of the article is to test, from micro-level data, the complete general framework of the transaction demand for money a la Baumol. Controlling for selection bias, we distinguish two populations who exclusively withdraw cash from either ATM or bank counter, from a sample of French representative individuals. The estimation results show the existence of large economies of scale as well as a positive effect of ATM surcharge and ATM and bank counter density on cash holding. Moreover, contrary to what might be expected, we do not find evidence of the impact of risk on cash holding.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Financial Economics.
Volume (Year): 18 (2008)
Issue (Month): 13 ()
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- von Kalckreuth, Ulf & Schmidt, Tobias & Stix, Helmut, 2011.
"Using cash to monitor liquidity: Implications for payments, currency demand and withdrawal behavior,"
Discussion Paper Series 1: Economic Studies
2011,22, Deutsche Bundesbank, Research Centre.
- Von Kalckreuth, Ulf & Schmidt, Tobias & Stix, Helmut, 2011. "Using cash to monitor liquidity - implications for payments, currency demand and withdrawal behavior," Working Paper Series 1385, European Central Bank.
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