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How do we choose to pay using evolving retail payment technologies? Evidence from Japan

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  • Fujiki, Hiroshi
  • Tanaka, Migiwa

Abstract

We examine the determinants of the choice of payment instruments for day-to-day transactions, and whether households that exclusively use cash (only cash users) hold more cash than households that use credit cards exclusively, cash and credit cards, or credit cards and other payment methods (card users) using Japanese household data. We obtain two main results. First, card users generally have higher disposable income, more financial assets, better financial knowledge, younger household heads, female household heads, higher educational attainment, and are not self-employed compared with only cash users. These findings suggest that an improvement in financial knowledge could increase the usage of credit cards in Japan. Second, holding other household characteristics constant, card users for day-to-day transaction values of more than 1000 yen have lower cash holdings than only cash users.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jjieco:v:49:y:2018:i:c:p:85-99
    DOI: 10.1016/j.jjie.2018.05.001
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    References listed on IDEAS

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    Cited by:

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    2. Hiroshi FUJIKI, 2019. "How do we choose to pay using evolving retail payment technologies? Some additional results from Japan," Working Papers e135, Tokyo Center for Economic Research.
    3. Kubota, So & Onishi, Koichiro & Toyama, Yuta, 2021. "Consumption responses to COVID-19 payments: Evidence from a natural experiment and bank account data," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 1-17.
    4. Hiroshi FUJIKI & Kiyotaka Nakashima, 2019. "Cash Usage Trends in Japan: Evidence Using Aggregate and Household Survey Data," Working Papers e131, Tokyo Center for Economic Research.
    5. Fujiki, Hiroshi, 2020. "Cash demand and financial literacy: A case study using Japanese survey data," Japan and the World Economy, Elsevier, vol. 54(C).

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    More about this item

    Keywords

    Cash demand; Credit cards;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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