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The Role of Cash in Household Savings

Author

Listed:
  • Ildiko Ritzl

    (Magyar Nemzeti Bank)

  • Aniko Szaraz

    (Magyar Nemzeti Bank)

  • Aniko Bodi-Schubert

    (Magyar Nemzeti Bank)

Abstract

According to both domestic and international analyses, the stable behaviour of household cash holdings in developed countries is primarily attributable to cash holdings for accumulation purposes. In our study, we review the factors that characterised the holding of forint cash for accumulation purposes between 2022 and 2025 and examine the motives behind individual cash-holding decisions, based on the results of a survey conducted among the adult Hungarian population. Our findings suggest that households' savings practices can be organised into a savings needs pyramid, in which cash plays a significant role in the safety reserve category, and individuals make what they perceive to be a rational decision regarding its holding in light of the foregone return. The mobilisation of funds held in liquid form as a safety reserve towards investment can be achieved by increasing institutional trust and reducing economic and social uncertainty.

Suggested Citation

  • Ildiko Ritzl & Aniko Szaraz & Aniko Bodi-Schubert, 2026. "The Role of Cash in Household Savings," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 25(2), pages 92-118.
    • Handle: RePEc:mnb:finrev:v:25:y:2026:i:2:p:92-118
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    File URL: https://hitelintezetiszemle.mnb.hu/sw/static/file/fer-25-2-st2-ritzl-szaraz-bodi-schubert.pdf
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    Keywords

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    JEL classification:

    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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