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Retail payment innovations and cash usage: accounting for attrition by using refreshment samples

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  • Heng Chen
  • Marie-Hélène Felt
  • Kim P. Huynh

Abstract

We exploit the panel dimension of the Canadian Financial Monitor (CFM) data to estimate the impact of retail payment innovations on cash usage. We estimate a semiparametric panel data modelthat accounts for unobserved heterogeneity and allows for general forms of non-random attrition. We use annual data from the CFM on the methods of payment and cash usage for the period 2010–12. Estimates based on cross-sectional methods find a large impact of retail payment on cash usage (around 10 percent). However, after correcting for attrition, we find that contactless credit cards and multiple stored-value cards (reloadable) have no significant impact on cash usage, while single-purpose stored-value cards reduce the usage of cash by 2 percent in terms of volume. These results point to the uneven pace of the diffusion of payment innovations, especially contactless credit.
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  • Heng Chen & Marie-Hélène Felt & Kim P. Huynh, 2017. "Retail payment innovations and cash usage: accounting for attrition by using refreshment samples," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 180(2), pages 503-530, February.
  • Handle: RePEc:bla:jorssa:v:180:y:2017:i:2:p:503-530
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    File URL: http://hdl.handle.net/10.1111/rssa.12208
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    Cited by:

    1. Huynh, Kim P. & Schmidt-Dengler, Philipp & Stix, Helmut, 2014. "Whenever and Wherever: The Role of Card Acceptance in the Transaction Demand for Money," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 472, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    2. Engert, Walter & Fung, Ben & Segendorf, Björn, 2019. "A Tale of Two Countries: Cash Demand in Canada and Sweden," Working Paper Series 376, Sveriges Riksbank (Central Bank of Sweden).
    3. Marie-Hélène Felt, 2018. "A Look Inside the Box: Combining Aggregate and Marginal Distributions to Identify Joint Distributions," Staff Working Papers 18-29, Bank of Canada.
    4. Heng Chen & Marie-Hélène Felt & Kim P. Huynh, 2017. "Retail payment innovations and cash usage: accounting for attrition by using refreshment samples," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 180(2), pages 503-530, February.
    5. Huynh, Kim P. & Schmidt-Dengler, Philipp & Stix, Helmut, 2014. "The Role of Card Acceptance in the Transaction Demand for Money," CEPR Discussion Papers 10183, C.E.P.R. Discussion Papers.
    6. Heng Chen & Geoffrey R. Dunbar & Rallye Shen, 2017. "The Mode is the Message: Using Predata as Exclusion Restrictions to Evaluate Survey Design," Staff Working Papers 17-43, Bank of Canada.
    7. Carlos A. Arango-Arango & Nicolás F. Suárez-Ariza, 2019. "Digital Payments Adoption and the Demand for Cash: New International Evidence," Borradores de Economia 1074, Banco de la Republica de Colombia.
    8. Fujiki, Hiroshi & Tanaka, Migiwa, 2018. "How do we choose to pay using evolving retail payment technologies? Evidence from Japan," Journal of the Japanese and International Economies, Elsevier, vol. 49(C), pages 85-99.
    9. Emre Ekinci & Insan Tunah & Berk Yavuzoglu, 2017. "Rescaled Additivity Non-Ignorable (RAN) Model of Generalized Attrition," Working Papers 1702, Nazarbayev University, Department of Economics, revised Mar 2017.
    10. Gradon Nicholls, 2017. "Bitcoin awareness and usage in Canada," Canadian Stata Users' Group Meetings 2017 08, Stata Users Group.
    11. Walter Engert & Ben Fung & Björn Segendorf, 2019. "A Tale of Two Countries: Cash Demand in Canada and Sweden," Discussion Papers 2019-7, Bank of Canada.
    12. Inna S. Lola & Murat Bakeev & Anton Manukov, 2019. "Effects Of Influence Of Economic And Technological Development Of It Segments On Digital Transformation Of Retail Trade," HSE Working papers WP BRP 102/STI/2019, National Research University Higher School of Economics.
    13. Walter Engert & Ben Fung, 2017. "Central Bank Digital Currency: Motivations and Implications," Discussion Papers 17-16, Bank of Canada.
    14. Chen, Heng & Huynh, Kim P. & Shy, Oz, 2019. "Cash versus card: Payment discontinuities and the burden of holding coins," Journal of Banking & Finance, Elsevier, vol. 99(C), pages 192-201.
    15. Takahiro Hoshino & Keisuke Takahata, 2018. "Identification of heterogeneous treatment effects as a function of potential untreated outcome under the nonignorable assignment condition," Keio-IES Discussion Paper Series 2018-005, Institute for Economics Studies, Keio University.
    16. DIMITRIU, Mihail, 2017. "Currency, Financial System And Virtual Space. A Microeconomic Approach," Journal of Financial and Monetary Economics, Centre of Financial and Monetary Research "Victor Slavescu", vol. 4(1), pages 261-265.
    17. Heng Chen & Marie-Hélène Felt & Christopher Henry, 2018. "2017 Methods-of-Payment Survey: Sample Calibration and Variance Estimation," Technical Reports 114, Bank of Canada.

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    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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