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Using cash to monitor liquidity - implications for payments, currency demand and withdrawal behavior

Author

Listed:
  • Von Kalckreuth, Ulf
  • Schmidt, Tobias
  • Stix, Helmut

Abstract

Standard transaction cost arguments can only partially explain why the share of cash transactions is still high in many countries. This paper shows that consumers JEL Classification: E41, E58, D12

Suggested Citation

  • Von Kalckreuth, Ulf & Schmidt, Tobias & Stix, Helmut, 2011. "Using cash to monitor liquidity - implications for payments, currency demand and withdrawal behavior," Working Paper Series 1385, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20111385
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    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp1385.pdf
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    References listed on IDEAS

    as
    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. Zinman, Jonathan, 2009. "Debit or credit?," Journal of Banking & Finance, Elsevier, vol. 33(2), pages 358-366, February.
    3. Soman, Dilip, 2001. " Effects of Payment Mechanism on Spending Behavior: The Role of Rehearsal and Immediacy of Payments," Journal of Consumer Research, Oxford University Press, vol. 27(4), pages 460-474, March.
    4. Kocherlakota, Narayana R., 1998. "Money Is Memory," Journal of Economic Theory, Elsevier, vol. 81(2), pages 232-251, August.
    5. Orazio P. Attanasio & Luigi Guiso & Tullio Jappelli, 2002. "The Demand for Money, Financial Innovation, and the Welfare Cost of Inflation: An Analysis with Household Data," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 317-351, April.
    6. Lippi, Francesco & Secchi, Alessandro, 2009. "Technological change and the households' demand for currency," Journal of Monetary Economics, Elsevier, vol. 56(2), pages 222-230, March.
    7. Helmut Stix, 2004. "How Do Debit Cards Affect Cash Demand? Survey Data Evidence," Economic Change and Restructuring, Springer, vol. 31(2), pages 93-115, June.
    8. Charles Sprenger & Joanna Stavins, 2008. "Credit card debt and payment use," Working Papers 08-2, Federal Reserve Bank of Boston.
    9. Fernando Alvarez & Francesco Lippi, 2009. "Financial Innovation and the Transactions Demand for Cash," Econometrica, Econometric Society, vol. 77(2), pages 363-402, March.
    10. Schuh, Scott & Stavins, Joanna, 2010. "Why are (some) consumers (finally) writing fewer checks? The role of payment characteristics," Journal of Banking & Finance, Elsevier, vol. 34(8), pages 1745-1758, August.
    11. Whitesell, William C, 1992. "Deposit Banks and the Market for Payment Media," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 24(4), pages 483-498, November.
    12. Kocherlakota, Narayana & Wallace, Neil, 1998. "Incomplete Record-Keeping and Optimal Payment Arrangements," Journal of Economic Theory, Elsevier, vol. 81(2), pages 272-289, August.
    13. Ron Borzekowski & K. Kiser Elizabeth & Ahmed Shaista, 2008. "Consumers' Use of Debit Cards: Patterns, Preferences, and Price Response," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(1), pages 149-172, February.
    14. David Bounie & Abel Francois, 2008. "Is Baumol's 'square root law' still relevant? evidence from micro-level data," Applied Financial Economics, Taylor & Francis Journals, vol. 18(13), pages 1091-1098.
    15. Carol C. Bertaut & Michael Haliassos & Michael Reiter, 2009. "Credit Card Debt Puzzles and Debt Revolvers for Self Control," Review of Finance, European Finance Association, vol. 13(4), pages 657-692.
    16. John Leahy & Andrew Caplin, 2004. "The Absentminded Consumer," 2004 Meeting Papers 784, Society for Economic Dynamics.
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    18. Borzekowski, Ron & Kiser, Elizabeth K., 2008. "The choice at the checkout: Quantifying demand across payment instruments," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 889-902, July.
    19. Nicole Jonker, 2007. "Payment Instruments as Perceived by Consumers – Results from a Household Survey," De Economist, Springer, vol. 155(3), pages 271-303, September.
    20. Peter Mooslechner & Helmut Stix & Karin Wagner, 2006. "How Are Payments Made in Austria?," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 111-134.
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    Citations

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    Cited by:

    1. Carlos Arango & Yassine Bouhdaoui & David Bounie & Martina Eschelbach & Lola Hernández, 2013. "Cash Management and Payment Choices: A Simulation Model with International Comparisons," Staff Working Papers 13-53, Bank of Canada.
    2. John Bagnall & David Bounie & Kim P. Huynh & Anneke Kosse & Tobias Schmidt & Scott Schuh, 2016. "Consumer Cash Usage: A Cross-Country Comparison with Payment Diary Survey Data," International Journal of Central Banking, International Journal of Central Banking, vol. 12(4), pages 1-61, December.
    3. repec:bla:jconsa:v:51:y:2017:i:1:p:91-112 is not listed on IDEAS
    4. Arango, Carlos & Huynh, Kim P. & Sabetti, Leonard, 2011. "How do you pay? The role of incentives at the point-of-sale," Working Paper Series 1386, European Central Bank.
    5. repec:bdi:opques:qef_144_01 is not listed on IDEAS
    6. Guerino Ardizzi & Eleonora Iachini, 2013. "Why are payment habits so heterogeneous across and within countries? Evidence from European countries and Italian regions," Questioni di Economia e Finanza (Occasional Papers) 144, Bank of Italy, Economic Research and International Relations Area.
    7. repec:eee:ecmode:v:69:y:2018:i:c:p:38-48 is not listed on IDEAS
    8. Klaus Forstner & Karin Wagner, 2014. "How Gender-Specific Are Payments? A Study Based on Austrian Survey Data from 1996 to 2011," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 36-53.
    9. Tobias Trütsch, 2016. "The impact of mobile payment on payment choice," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 30(3), pages 299-336, August.
    10. Heng Chen & Kim Huynh & Oz Shy, 2017. "Cash Versus Card: Payment Discontinuities and the Burden of Holding Coins," Staff Working Papers 17-47, Bank of Canada.
    11. Ben Fung & Hanna Halaburda, 2016. "Central Bank Digital Currencies: A Framework for Assessing Why and How," Discussion Papers 16-22, Bank of Canada.
    12. repec:taf:applec:v:49:y:2017:i:30:p:2989-3004 is not listed on IDEAS
    13. Lola Hernandez & Nicole Jonker & Anneke Kosse, 2017. "Cash versus Debit Card: The Role of Budget Control," Journal of Consumer Affairs, Wiley Blackwell, vol. 51(1), pages 91-112, March.
    14. Huynh, Kim P. & Schmidt-Dengler, Philipp & Stix, Helmut, 2014. "Whenever and Wherever: The Role of Card Acceptance in the Transaction Demand for Money," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 472, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    15. Huynh, Kim P. & Schmidt-Dengler, Philipp & Stix, Helmut, 2014. "The Role of Card Acceptance in the Transaction Demand for Money," CEPR Discussion Papers 10183, C.E.P.R. Discussion Papers.
    16. Eschelbach, Martina & Schmidt, Tobias, 2013. "Precautionary motives in short-term cash management: Evidence from German POS transactions," Discussion Papers 38/2013, Deutsche Bundesbank.
    17. Clemens Jobst & Helmut Stix, 2016. "Florin, crown, schilling and euro: an overview of 200 years of cash in Austria," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 94-119.
    18. Sinelnikova-Muryleva, Elena, 2018. "Analysis of the Consequences of the Development of Payment Systems for Monetary Policy in the Context of Deepening Financial Markets," Working Papers 031813, Russian Presidential Academy of National Economy and Public Administration.
    19. Magnac, Thierry, 2017. "ATM foreign fees and cash withdrawals," Journal of Banking & Finance, Elsevier, vol. 78(C), pages 117-129.
    20. Kosse, A., 2014. "Consumer payment choices : Room for further digisation?," Other publications TiSEM 7486cb21-13a2-4609-bad6-e, Tilburg University, School of Economics and Management.
    21. David, Bounie & Abel, François & Patrick, Waelbroeck, 2016. "Debit card and demand for cash," Journal of Banking & Finance, Elsevier, vol. 73(C), pages 55-66.
    22. Peter Mooslechner & Helmut Stix & Karin Wagner, 2012. "The Use of Payment Instruments in Austria - A Study Based on Survey Data from 1996 to 2011," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 4, pages 53-77.
    23. Carin van der Cruijsen & Mirjam Plooij, 2015. "Changing payment patterns at point-of-sale: their drivers," DNB Working Papers 471, Netherlands Central Bank, Research Department.
    24. Carin van der Cruijsen & Lola Hernandez & Nicole Jonker, 2017. "In love with the debit card but still married to cash," Applied Economics, Taylor & Francis Journals, vol. 49(30), pages 2989-3004, June.
    25. Carlos Arango & Dylan Hogg & Alyssa Lee, 2012. "Why Is Cash (Still) So Entrenched? Insights from the Bank of Canada’s 2009 Methods-of-Payment Survey," Discussion Papers 12-2, Bank of Canada.

    More about this item

    Keywords

    cash usage; currency demand; payment behavior; payment cards; payment innovation; payment instruments; survey data; withdrawal behavior;

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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