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Electronic Money or Cash? In Face of Liquidity Crisis in Zimbabwe

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  • Upenyu Sakarombe
  • Namatirai Dziva Marabada

Abstract

The aim of the study was to assess whether plastic money can be a therapy to the cash crisis in Zimbabwe. This was done through investigating when the population of Zimbabwe would fully and willingly adopt and implement the use of plastic money using a sample of 200 respondents. The results showed that the use of plastic money is still a bit far from acceptance by individuals as people still prefer cash to electronic money reflected by a 66% cash preference vis-a-vis 3% electronic money preference. The reasons for unwillingness to change emanate from lack of understanding the concept of plastic money, lack of trust in the banking sector, fear of the unknown, exploitive charges in the use of plastic money and poor network services. Therefore in order to have a cashless society, it was recommended that the network service quality should be improved, the public should be educated, points of sale (POS) should be increased, transaction costs should be reduced, financial inclusion should be considered and confidence in the banking sector should be restored.

Suggested Citation

  • Upenyu Sakarombe & Namatirai Dziva Marabada, 2017. "Electronic Money or Cash? In Face of Liquidity Crisis in Zimbabwe," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(11), pages 63-73, November.
    • Handle: RePEc:hur:ijarbs:v:7:y:2017:i:11:p:63-73
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    References listed on IDEAS

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    1. William J. Baumol, 1952. "The Transactions Demand for Cash: An Inventory Theoretic Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 66(4), pages 545-556.
    2. J. Tobin, 1958. "Liquidity Preference as Behavior Towards Risk," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 25(2), pages 65-86.
    3. 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.
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    Cited by:

    1. Varaidzo Denhere & David Mhlanga, 2021. "The Use of Surrogate Currency to Address Liquidity Crisis: The Zimbabwean Experience," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 9(3), pages 159-169.

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