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The economics of bill payments: an empirical analysis

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  • D. Bounie
  • A. Francois

Abstract

The growing economic literature dedicated to payment instruments mainly focuses on the point of sale payments. Yet, credit transfers and direct debits used in bill payments are much more used in the euro area than cheques, payment cards and other payment instruments. The main objective of this article is, therefore, to verify whether the theoretical standard framework stated for studying the choice of payment instruments at the point of sale is relevant to study bill payments. Using an original data set, we show that the main predictions of the standard model do not hold.

Suggested Citation

  • D. Bounie & A. Francois, 2011. "The economics of bill payments: an empirical analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 18(10), pages 961-966.
  • Handle: RePEc:taf:apeclt:v:18:y:2011:i:10:p:961-966
    DOI: 10.1080/13504851.2010.520660
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    References listed on IDEAS

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    1. Klee, Elizabeth, 2008. "How people pay: Evidence from grocery store data," Journal of Monetary Economics, Elsevier, vol. 55(3), pages 526-541, April.
    2. William J. Baumol, 1952. "The Transactions Demand for Cash: An Inventory Theoretic Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 66(4), pages 545-556.
    3. 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.
    4. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    5. 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 246-257, May.
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    Keywords

    payment instruments; bill payments;

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