Cash management and choice of payment media: a critical survey of the theory
AbstractThis report addresses the question whether economic theory can explain the choice of payment media for over-the-counter payments. A survey of the literature reveals that most of the existing microeconomic models are limited to the explanation of the size of cash balance. Only two models describe the optimal choice between different modes of payment such as cash payment, payment by electronic money and debitcard payment. One of these approaches has been extended in this report, in order to study the effects on transaction balances and optimal mode of payment, for exmple, caused by interest rate changes or the introduction of new payment media.
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Bibliographic InfoPaper provided by Netherlands Central Bank, Research Department in its series WO Research Memoranda (discontinued) with number 532.
Date of creation: 1998
Date of revision:
cash management; demand for money; payments behaviour;
Find related papers by JEL classification:
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
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- Pippow Ingo & Schoder Detlef, 2002. "The Demand for Stored Value Payment Instruments," Microeconomics, EconWPA 0204002, EconWPA.
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