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National Culture and the Demand for Physical Money During the First Year of the COVID-19 Pandemic

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  • Radoslaw Kotkowski

    (Nicolaus Copernicus University in Toruń)

Abstract

There was a significant increase in the demand for physical money during the COVID-19 pandemic. This stood in stark contrast to the decline in demand witnessed during previous pandemics. However, the change was not uniform and varied significantly between countries. By employing the “national culture” framework to identify the drivers of this variation, this study found that uncertainty avoidance, as well as social norms regarding gratification, played a major role. This suggests that some central banks should hold larger cash reserves to mitigate the risk of uncertainty and that the national culture framework may prove useful in researching the international differences in past, present, and future money demand.

Suggested Citation

  • Radoslaw Kotkowski, 2022. "National Culture and the Demand for Physical Money During the First Year of the COVID-19 Pandemic," NBP Working Papers 351, Narodowy Bank Polski.
    • Handle: RePEc:nbp:nbpmis:351
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    References listed on IDEAS

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    Cited by:

    1. Kotkowski, Radoslaw, 2023. "National culture and the demand for physical money during the first year of the COVID-19 pandemic," Finance Research Letters, Elsevier, vol. 51(C).
    2. Justus Meyer & Federica Teppa, 2023. "Euro area consumers' payment behaviour and banking digitalisation," Working Papers 772, DNB.

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    More about this item

    Keywords

    COVID-19 pandemic; money demand; currency in circulation; national culture; uncertainty avoidance;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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