Modeling the Share of Cash Payments in the Economy: An Application to France
Modeling the demand for cash and deposits is a primary concern for central banks. Within a wide range of academic contributions, payment choice models based on transaction sizes (TS models) have been promoted. However, TS models induce strong predictions about the use of payment instruments. In particular, all equal-sized transactions are supposed to be paid with the same payment instrument. We propose a simple alternative model based on cash holding (CH model) that allows equal-sized transactions to be paid for in cash or with other payment instruments. Using micro-level payment data from two representative samples of the French population in 2005 and 2011, we test how well each model replicates the observed shares of cash payments in the French economy for each size of transaction. We find that the CH model outperforms TS models, as it better predicts the observed shares of cash payments with notably less demanding information on individuals.
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.:
- Anthony M. Santomero & John J. Seater, 1996.
"Alternative monies and the demand for media of exchange,"
Board of Governors of the Federal Reserve System (U.S.), pages 942-964.
- Santomero, Anthony M & Seater, John J, 1996. "Alternative Monies and the Demand for Media of Exchange," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 942-60, November.
- Anthony M. Santomero & John J. Seater, 1995. "Alternative Monies and the Demand for Media of Exchange," Center for Financial Institutions Working Papers 96-08, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Jonathan Zinman, 2005.
"Debit or credit?,"
Conference Series ; [Proceedings],
Federal Reserve Bank of Boston.
- Fumiko Hayashi & Elizabeth Klee, 2002.
"Technology adoption and consumer payments : evidence from survey data,"
Payments System Research Working Paper
PSR WP 02-01, Federal Reserve Bank of Kansas City.
- Hayashi Fumiko & Klee Elizabeth, 2003. "Technology Adoption and Consumer Payments: Evidence from Survey Data," Review of Network Economics, De Gruyter, vol. 2(2), pages 1-16, June.
- Santomero, Anthony M, 1974. "A Model of the Demand for Money by Households," Journal of Finance, American Finance Association, vol. 29(1), pages 89-102, March.
- Shy, Oz & Tarkka, Juha, 1998.
"The Market for Electronic Cash Cards,"
Research Discussion Papers
21/1998, Bank of Finland.
- Francesco Lippi & Alessandro Secchi, 2008.
"Technological change and the households' demand for currency,"
EIEF Working Papers Series
0801, Einaudi Institute for Economics and Finance (EIEF), revised Oct 2008.
- Lippi, Francesco & Secchi, Alessandro, 2009. "Technological change and the households' demand for currency," Journal of Monetary Economics, Elsevier, vol. 56(2), pages 222-230, March.
- Peter Mooslechner & Helmut Stix & Karin Wagner, 2006. "How Are Payments Made in Austria?," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 111–134.
- Ulf Kalckreuth & Tobias Schmidt & Helmut Stix, 2014.
"Choosing and using payment instruments: evidence from German microdata,"
Springer, vol. 46(3), pages 1019-1055, May.
- von Kalckreuth, Ulf & Schmidt, Tobias & Stix, Helmut, 2009. "Choosing and using payment instruments: evidence from German microdata," Discussion Paper Series 1: Economic Studies 2009,36, Deutsche Bundesbank, Research Centre.
- Von Kalckreuth, Ulf & Schmidt, Tobias & Stix, Helmut, 2009. "Choosing and using payment instruments: evidence from German microdata," Working Paper Series 1144, European Central Bank.
- Klee, Elizabeth, 2008. "How people pay: Evidence from grocery store data," Journal of Monetary Economics, Elsevier, vol. 55(3), pages 526-541, April.
- Whitesell, William C, 1989. "The Demand for Currency versus Debitable Accounts: A Note," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(2), pages 246-57, May.
When requesting a correction, please mention this item's handle: RePEc:ijc:ijcjou:y:2012:q:4:a:5. 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: (Timo Laurmaa)
If references are entirely missing, you can add them using this form.