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Effects of credit and debit cards on the currency demand

Author Info

Listed author(s):
  • Hakan Yilmazkuday
  • M. Ege Yazgan

Abstract

We analyze the effects of credit and debit cards on the currency in circulation by using GMM estimation. Instead of using the data obtained by surveys, we use monthly data obtained by an interbank institution that keeps the statistics of all credit and debit cards usage of a small open economy, Turkey, for the period over 2002M1-2006M10. As expected from the theory, we find that an increase in the usage of credit and debit cards leads to a decrease in the currency demand. Moreover, the usage of the debit cards has a bigger effect on the money demand, compared to the usage of the credit cards. We also find that the effect of credit cards is mostly through purchases and the effect of debit cards is mostly through withdrawals

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File URL: http://www.tandfonline.com/doi/abs/10.1080/00036840701222496
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Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 41 (2009)
Issue (Month): 17 ()
Pages: 2115-2123

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Handle: RePEc:taf:applec:v:41:y:2009:i:17:p:2115-2123
DOI: 10.1080/00036840701222496
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Cited by:

  1. Yilmazkuday, Hakan, 2011. "Monetary policy and credit cards: Evidence from a small open economy," Economic Modelling, Elsevier, vol. 28(1-2), pages 201-210, January.
  2. David, Bounie & Abel, François & Patrick, Waelbroeck, 2016. "Debit card and demand for cash," Journal of Banking & Finance, Elsevier, vol. 73(C), pages 55-66.

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