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The use of noncash payment methods for regular payments and the household demand for cash: evidence from Japan

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  • Hiroshi Fujiki

    (Chuo University)

Abstract

Understanding the demand for cash and noncash payment methods is an important policy concern in Japan, as the Japanese government aims at a cashless economy. Previous studies show that the demand for specific payment methods depends not only on the motivations of the kind of transactions, such as day-to-day transactions or hoarding, but also on payment contexts, such as bill payments or online payments. However, a few studies have investigated the demand for payment methods by payment context in Japan. We fill this gap by examining Japanese family and single-person household data on the choice of cash and noncash payment methods for regular payments, including bill payments. We found a decreasing popularity of choices involving automatic withdrawals and an increasing popularity of choices involving credit cards in both data sets and that of choosing exclusively cash in the single-person households’ data. We also found that these changes are associated with a decreasing demand for cash in family households and, conversely, an increasing demand in single-person households, assuming that the current pace of gradual adoption of noncash payment methods continues. In promoting a cashless society, the Japanese government should pay attention to the finding that a more frequent use of credit cards for regular payments is not always associated with a decrease in the demand for cash.

Suggested Citation

  • Hiroshi Fujiki, 2020. "The use of noncash payment methods for regular payments and the household demand for cash: evidence from Japan," The Japanese Economic Review, Springer, vol. 71(4), pages 719-765, October.
  • Handle: RePEc:spr:jecrev:v:71:y:2020:i:4:d:10.1007_s42973-020-00049-5
    DOI: 10.1007/s42973-020-00049-5
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    Cited by:

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    3. Fuzhong Chen & Guohai Jiang, 2022. "The Roles of FinTech with Perceived Mediators in Consumer Financial Satisfaction with Cashless Payments," Mathematics, MDPI, vol. 10(19), pages 1-21, September.
    4. Madeira, Carlos & Margaretic, Paula, 2022. "The impact of financial literacy on the quality of self-reported financial information," Journal of Behavioral and Experimental Finance, Elsevier, vol. 34(C).
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    6. Hiroshi Fujiki, 2023. "Attributes needed for Japan’s central bank digital currency," The Japanese Economic Review, Springer, vol. 74(1), pages 117-175, January.
    7. Aniko Bodi-Schubert & Ildiko Ritzlne Kazimir, 2023. "Factors Shaping Euro and Forint Cash Holding Ratios - The Rise of Cash Demand for Savings Purposes from the Turn of the Millennium," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 22(3), pages 67-96.

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    More about this item

    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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