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Transaction Technology Innovation and Demand for Overnight Deposits in Italy

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  • Francesco Columba

    ()
    (Bank of Italy, Economic Research Department)

Abstract

This paper analyzes the effect of transaction technology innovation on demand deposits.Using panel data for Italy we have two results. First, transaction technology innovation has a positive effect on demand deposits. Second, accounting for this innovation in the regressions significantly reduces the income elasticity of money demand typically detected in the existing empirical estimates.

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File URL: http://www.bancaditalia.it/pubblicazioni/econo/temidi/td03/td468_03/td468/tema_468_03.pdf
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Bibliographic Info

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 468.

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Date of creation: Mar 2003
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Handle: RePEc:bdi:wptemi:td_468_03

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Postal: Via Nazionale, 91 - 00184 Roma
Web page: http://www.bancaditalia.it
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Related research

Keywords: demand for money; omitted variables; transaction technology;

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References

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  1. Casey B. Mulligan & Xavier Sala-i-Martin, 1996. "Adoption of Financial Technologies: Implications for Money Demand and Monetary Policy," NBER Working Papers 5504, National Bureau of Economic Research, Inc.
  2. Paroush, Jacob & Ruthenberg, David, 1986. "Automated teller machines and the share of demand deposits in the money supply: The Israeli Experience," European Economic Review, Elsevier, vol. 30(6), pages 1207-1215, December.
  3. repec:rie:review:v:6:y:2001:i:3:n:2 is not listed on IDEAS
  4. Hester,D.D. & Calcagnini,G. & Bonis,R. de, 1999. "Competition through innovation : ATMs in Italian banks," Working papers 27, Wisconsin Madison - Social Systems.
  5. Attanasio, Orazio & Guiso, Luigi & Jappelli, Tullio, 1998. "The Demand for Money, Financial Innovation and the Welfare Cost of Inflation: An Analysis with Households' Data," CEPR Discussion Papers 1927, C.E.P.R. Discussion Papers.
  6. Domenica J. Marchetti, 1999. "Markup and the Business Cycle: Evidence from Italian Manufacturing Branches," Temi di discussione (Economic working papers) 362, Bank of Italy, Economic Research and International Relations Area.
  7. Casey B. Mulligan & Xavier Sala-i-Martin, 2000. "Extensive Margins and the Demand for Money at Low Interest Rates," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 961-991, October.
  8. Dario Focarelli, 2002. "Bootstrap bias-correction procedure in estimating long-run relationships from dynamic panels, with an application to money demand in the euro area," Temi di discussione (Economic working papers) 440, Bank of Italy, Economic Research and International Relations Area.
  9. Luca Dedola & Eugenio Gaiotti & Luca Silipo, 2001. "Money demand in the euro area: do national differences matter?," Temi di discussione (Economic working papers) 405, Bank of Italy, Economic Research and International Relations Area.
  10. Duca, John V, 2000. "Financial Technology Shocks and the Case of the Missing M2," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(4), pages 820-39, November.
  11. Angelini, P. & Hendry, D.F. & Rinaldi, R., 1993. "An Econometric Analysis of Money Demand in Italy," Papers 219, Banca Italia - Servizio di Studi.
  12. Casey B. Mulligan & Xavier Sala-I-Martin, 1992. "U.S. Money Demand: Surprising Cross-Sectional Estimates," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 285-343.
  13. Andrea Gerali & Francesco Lippi, 2002. "On the 'conquest' of inflation," Temi di discussione (Economic working papers) 444, Bank of Italy, Economic Research and International Relations Area.
  14. Alan B. Krueger, 2001. "An Interview with William J. Baumol," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 211-231, Summer.
  15. Stephen M. Goldfeld, 1976. "The Case of the Missing Money," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(3), pages 683-740.
  16. Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, vol. 68(1), pages 79-113, July.
  17. Piero Cipollone, 2001. "La convergenza dei salari manifatturieri in Europa," Temi di discussione (Economic working papers) 398, Bank of Italy, Economic Research and International Relations Area.
  18. Marchetti, D.J., 1999. "Markup and the Business Cycle: Evidence from Italian Manufacturing Branches," Papers 362, Banca Italia - Servizio di Studi.
  19. Mathias Drehmann & Charles Goodhart & Malte Krueger, 2002. "The challenges facing currency usage: will the traditional transaction medium be able to resist competition from the new technologies?," Economic Policy, CEPR & CES & MSH, vol. 17(34), pages 193-228, 04.
  20. Bonaccorsi di Patti, Emilia & Gobbi, Giorgio, 2001. "The changing structure of local credit markets: Are small businesses special?," Journal of Banking & Finance, Elsevier, vol. 25(12), pages 2209-2237, December.
  21. Alessandro Calza & Alexander Jung & Livio Stracca, 2000. "An econometric analysis of the main components of M3 in the Euro area," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 136(4), pages 680-701, December.
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Citations

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Cited by:
  1. Francesco Columba, 2007. "Speed of euro adoption," 2007 Meeting Papers 350, Society for Economic Dynamics.
  2. Columba, Francesco, 2009. "Narrow money and transaction technology: new disaggregated evidence," MPRA Paper 12689, University Library of Munich, Germany.

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