Advanced Search
MyIDEAS: Login to save this paper or follow this series

The economics of cash shortage

Contents:

Author Info

  • Conway, Patrick
Registered author(s):

    Abstract

    Many economies of the former Soviet Union have experienced cash shortages: people with demand and savings deposits in the banking system are unable to convert them into currency. Usually this is attributed to the common use of the ruble. The author argues otherwise. According to him: (a) cash shortages are manifestations of financial disintermediation: the banking sector is unable to attract enough voluntary deposits; (b) cash shortages allow the government to hold inflationary pressures in check; (c) solutions to the cash shortage problems that rely on printing newcurrency will lead to accelerating inflation. More appropriate solutions (increasing the nominal interest rates, for example) involve reversing the economic incentives to financial disintermediation. Excess demands for cash reflect conditions in financial markets. The phenomenon of cash shortage is related to the concept of shallow formal financial markets. This shallowness is recent in the former Soviet Union. The burst of inflation in early 1992 removed the"ruble overhang"and greatly reduced all indicators of financial depth. Continuing shallowness is a direct consequence of financial disintermediation because of negative real interest rates.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/1994/10/01/000009265_3970716141829/Rendered/PDF/multi_page.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1367.

    as in new window
    Length:
    Date of creation: 31 Oct 1994
    Date of revision:
    Handle: RePEc:wbk:wbrwps:1367

    Contact details of provider:
    Postal: 1818 H Street, N.W., Washington, DC 20433
    Phone: (202) 477-1234
    Email:
    Web page: http://www.worldbank.org/
    More information through EDIRC

    Related research

    Keywords: Banks&Banking Reform; Economic Theory&Research; Financial Intermediation; Environmental Economics&Policies; Rural Finance;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Dornbusch, Rudiger, 1992. "Lessons from Experiences with High Inflation," World Bank Economic Review, World Bank Group, World Bank Group, vol. 6(1), pages 13-31, January.
    2. International Monetary Fund, 1992. "Bank Insolvency and Stabilization in Eastern Europe," IMF Working Papers, International Monetary Fund 92/9, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Conway, Patrick, 1994. "Ruble overhang and ruble shortage : were they the same thing?," Policy Research Working Paper Series 1389, The World Bank.
    2. Conway, Patrick, 1994. "Sustained inflation in response to price liberalization," Policy Research Working Paper Series 1368, The World Bank.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:1367. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.