IDEAS home Printed from https://ideas.repec.org/a/jed/journl/v45y2020i1p159-183.html

Debit Card Usage as a Rational Choice: The Moderating Effect of Cash Habit

Author

Listed:
  • Dung Phuong Hoang and Thong Huy Vu

    (Vietnam Banking Academy, National Economics University)

Abstract

This research takes a new perspective in explaining the willingness to use debit cards in which the use of debit cards is treated as a rational choice over cash, its alternative means of payment. Upon the adaption of rational choice theory, this study comprehensively identifies the costs and benefits associated with debit card usage and tests the effects of these forces on debit cardholders’ willingness to use the card. Moreover, this study also investigates the influence of cash habit on the willingness to use debit cards. This research employed both the qualitative method with in-depth interview to develop hypotheses and measurement scales and quantitative survey on 376 Vietnamese debit cardholders to test the conceptual model. The findings indicate that the willingness to use debit cards can be significantly encouraged by enhancing perceived benefits and reducing perceived adaptation costs associated with debit card usage. Moreover, although the habit of using cash does not directly affect willingness to use debit cards, it significantly weakens the positive impacts of perceived benefits and strengthens the negative impacts of perceived adaption costs on willingness to use debit cards.

Suggested Citation

  • Dung Phuong Hoang and Thong Huy Vu, 2020. "Debit Card Usage as a Rational Choice: The Moderating Effect of Cash Habit," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 45(1), pages 159-183, March.
    • Handle: RePEc:jed:journl:v:45:y:2020:i:1:p:159-183
    as

    Download full text from publisher

    File URL: http://jed.or.kr/full-text/45-1/9.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Xuan Vinh Vo & Huu Huan Nguyen, 2018. "Bank restructuring and bank efficiency—The case of Vietnam," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1520423-152, January.
    2. Olivier Brette & Nathalie Lazaric & Victor Vieira da Silva, 2017. "Habit, decision making, and rationality : comparing Veblen and early Herbert Simon," Post-Print halshs-01310305, HAL.
    3. Nguyen Dong Phong & Ho Viet Tien & Vo Xuan Vinh, 2018. "Challenges for Vietnam in the Globalization Era," Asian Journal of Law and Economics, De Gruyter, vol. 9(1), pages 1-3, April.
    4. Vo, Xuan Vinh & Nguyen, Dong Phong & Ho, Viet Tien & Nguyen, Trung Thong, 2017. "Where do the advanced countries invest? An investigation of capital flows from advanced countries to emerging economies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 51(C), pages 142-154.
    5. Garcia-Swartz Daniel D. & Hahn Robert W. & Layne-Farrar Anne, 2006. "The Move Toward a Cashless Society: A Closer Look at Payment Instrument Economics," Review of Network Economics, De Gruyter, vol. 5(2), pages 1-24, June.
    6. Olivier Brette & Nathalie Lazaric & Victor Vieira da Silva, 2017. "Habit, Decision-Making, and Rationality: Comparing Thorstein Veblen and Early Herbert Simon," Journal of Economic Issues, Taylor & Francis Journals, vol. 51(3), pages 567-587, July.
    7. Allingham, Michael, 2002. "Choice Theory: A Very Short Introduction," OUP Catalogue, Oxford University Press, number 9780192803030.
    8. Xuan Vinh Vo & Huu Huan Nguyen & Khanh Duy Pham, 2016. "Financial structure and economic growth: the case of Vietnam," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(2), pages 141-154, August.
    9. Geoffrey Hodgson, 2010. "Choice, habit and evolution," Journal of Evolutionary Economics, Springer, vol. 20(1), pages 1-18, January.
    10. Soane, Emma & Dewberry, Chris & Narendran, Sunitha, 2010. "The role of perceived costs and perceived benefits in the relationship between personality and risk-related choices," LSE Research Online Documents on Economics 28353, London School of Economics and Political Science, LSE Library.
    11. Vo Xuan Vinh & Nguyen Dong Phong, 2018. "Vietnam and Other Asian Countries in the Process of Globalization," Asian Journal of Law and Economics, De Gruyter, vol. 9(1), pages 1-6, April.
    12. Vo, Xuan Vinh & Truong, Quang Binh, 2018. "Does momentum work? Evidence from Vietnam stock market," Journal of Behavioral and Experimental Finance, Elsevier, vol. 17(C), pages 10-15.
    13. Shelanski, Howard A & Klein, Peter G, 1995. "Empirical Research in Transaction Cost Economics: A Review and Assessment," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 11(2), pages 335-361, October.
    14. Emma Soane & Chris Dewberry & Sunitha Narendran, 2010. "The role of perceived costs and perceived benefits in the relationship between personality and risk-related choices," Journal of Risk Research, Taylor & Francis Journals, vol. 13(3), pages 303-318, April.
    15. Garcia-Swartz Daniel D. & Hahn Robert W. & Layne-Farrar Anne, 2006. "The Move Toward a Cashless Society: Calculating the Costs and Benefits," Review of Network Economics, De Gruyter, vol. 5(2), pages 1-30, June.
    16. Mr. Marco Arnone & Mr. Luca Bandiera, 2004. "Monetary Policy, Monetary Areas, and Financial Development with Electronic Money," IMF Working Papers 2004/122, International Monetary Fund.
    17. Vo Xuan Vinh & Phan Dang Bao Anh, 2016. "Herd Behavior in Emerging Equity Markets: Evidence from Vietnam," Asian Journal of Law and Economics, De Gruyter, vol. 7(3), pages 369-383, December.
    18. Tony Lawson, 2015. "Process, order and stability in Veblen," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 39(4), pages 993-1030.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Steve Fleetwood, 2021. "A definition of habit for socio-economics," Review of Social Economy, Taylor & Francis Journals, vol. 79(2), pages 131-165, April.
    2. Tran Huong Thi Thanh & Le Ha Thi Thu, 2021. "The Impact of Financial Inclusion on Poverty Reduction," Asian Journal of Law and Economics, De Gruyter, vol. 12(1), pages 95-119, April.
    3. Bui Quang Hung, Trinh Thuy Anh and Nguyen Ngoc Thong, 2020. "Innovation: From Capabilities to Performance in Manufacturing Enterprises in Vietnam," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 45(1), pages 61-81, March.
    4. Quang Dung Truong, Hai Quang Nguyen and Dang Khoa Tran, 2020. "Elasticity of Market Demand between Modes of Transport in Vietnam by Price and Income," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 45(1), pages 83-96, March.
    5. Xuan Vinh Vo, Thi Tuan Anh Tran and Van Thang Nguyen, 2020. "Investigating the Economic Relationship between Provinces in Vietnam:A Spatial Regression Approach," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 45(1), pages 47-60, March.
    6. Fumiko Hayashi, 2009. "Do U.S. consumers really benefit from payment card rewards?," Economic Review, Federal Reserve Bank of Kansas City, vol. 94(Q I), pages 37-63.
    7. Rupali Misra & Sumita Srivastava & D. K. Banwet, 2019. "Are type B investors efficacious? Exploring role of personality in ambidextrous investment decision-making," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 46(1), pages 27-34, March.
    8. Fumiko Hayashi, 2008. "The economics of payment card fee structure: what drives payment card rewards?," Research Working Paper RWP 08-07, Federal Reserve Bank of Kansas City.
    9. Jakub Gorka, 2012. "Synthesis of studies on costs of cash and non-cash payment instruments (Synteza badan kosztow gotowki i bezgotowkowych instrumentow platniczych )," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 10(39), pages 223-241.
    10. Alexandre Chirat & Michaël Assous & Olivier Brette & Judith Favereau, 2022. "Herbert Simon’s experience at the Cowles Commission (1947–1954)," EconomiX Working Papers 2022-11, University of Paris Nanterre, EconomiX.
    11. Kim, Young Sik & Lee, Manjong, 2016. "Who should bear the resource cost of electronic transaction?," Journal of Macroeconomics, Elsevier, vol. 47(PB), pages 270-280.
    12. Kevin Maréchal, 2018. "Recasting the understanding of habits for behaviour-oriented policies in transportation," ULB Institutional Repository 2013/270475, ULB -- Universite Libre de Bruxelles.
    13. Le Ha Thi Thu, 2020. "The Impact of Auditor Specialization and Banks’ Listing Status on Earnings Management in Vietnamese Commercial Banks," Asian Journal of Law and Economics, De Gruyter, vol. 11(1), pages 1-16, April.
    14. Hideo Suzuki & Masaya Misaki & Frank Krueger & Jerzy Bodurka, 2015. "Neural Responses to Truth Telling and Risk Propensity under Asymmetric Information," PLOS ONE, Public Library of Science, vol. 10(9), pages 1-18, September.
    15. Tao Ye & Yangbin Liu & Jiwei Wang & Ming Wang & Peijun Shi, 2017. "Farmers’ crop insurance perception and participation decisions: empirical evidence from Hunan, China," Journal of Risk Research, Taylor & Francis Journals, vol. 20(5), pages 664-677, May.
    16. Segendorf, Björn & Jansson, Thomas, 2012. "The Cost of Consumer Payments in Sweden," Working Paper Series 262, Sveriges Riksbank (Central Bank of Sweden).
    17. Le, Ha Thi Thu & Tran, Ha Giang & Vo, Xuan Vinh, 2021. "Audit quality, accruals quality and the cost of equity in an emerging market: Evidence from Vietnam," International Review of Financial Analysis, Elsevier, vol. 77(C).
    18. Rysman Marc & Wright Julian, 2014. "The Economics of Payment Cards," Review of Network Economics, De Gruyter, vol. 13(3), pages 303-353, September.
    19. Brendan Markey-Towler, 2018. "A formal psychological theory for evolutionary economics," Journal of Evolutionary Economics, Springer, vol. 28(4), pages 691-725, September.
    20. Xiangyu Chen & Muhammad Safdar Sial & Dang Khoa Tran & Waseem Alhaddad & Jinsoo Hwang & Phung Anh Thu, 2020. "Are Socially Responsible Companies Really Ethical? The Moderating Role of State-Owned Enterprises: Evidence from China," Sustainability, MDPI, vol. 12(7), pages 1-19, April.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jed:journl:v:45:y:2020:i:1:p:159-183. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sung Y. Park (email available below). General contact details of provider: https://edirc.repec.org/data/eccaukr.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.