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Retail payments and the real economy

Author

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  • Schmiedel, Heiko
  • Hasan, Iftekhar
  • De Renzis, Tania

Abstract

This paper examines the fundamental relationship between retail payments and the real economy. Using data from across 27 European markets over the period 1995-2009, the results confirm that migration to efficient electronic retail payments stimulates the overall economy, consumption and trade. Among different payment instruments, this relationship is strongest for card payments, followed by credit transfers. Cheque payments are found to have a relatively low macroeconomic impact. Retail payment transaction technology itself is also associated positively to real economic aggregates. We also show that initiatives to integrate and harmonise retail payment markets foster trade and consumption and thereby have a beneficial effect for whole economy. Additionally, the findings reveal that the impact of retail payments on the real economy is more pronounced in euro area countries. Our findings are robust to different regression specifications. The study supports the adoption of policies promoting a swift migration to efficient and harmonised electronic payment instruments. JEL Classification: G20, G21

Suggested Citation

  • Schmiedel, Heiko & Hasan, Iftekhar & De Renzis, Tania, 2013. "Retail payments and the real economy," Working Paper Series 1572, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20131572
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    References listed on IDEAS

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    Cited by:

    1. Silva, Vânia G. & Ramalho, Esmeralda A. & Vieira, Carlos R., 2016. "The impact of SEPA in credit transfer payments: Evidence from the euro area," Research in International Business and Finance, Elsevier, vol. 38(C), pages 404-416.
    2. Fabio Ortega & Carlos León, 2017. "Las transferencias compensadas por ACH Colombia: Un análisis desde la perspectiva de topología de redes," Borradores de Economia 990, Banco de la Republica de Colombia.
    3. Beata Swiecka, 2015. "Mobile Payments as Innovations on the Retail Cashless Payments Market (Platnosci mobilne jako innowacje na rynku detalicznych platnoœci bezgotowkowych)," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 13(54), pages 29-40.

    More about this item

    Keywords

    financial development; real economy; retail payments;

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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