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Everyday Cash Usage and Corruption Perception: Evidence From a Panel of Countries

Author

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  • Radosław Kotkowski
  • Piotr Dybka
  • Anna Iwona Piotrowska
  • Leo Van Hove

Abstract

This paper examines the relationship between cash usage in consumer transactions and corruption perception for a panel of 29 developed countries from 2012 to 2024. We construct a unique dataset based on payment diary studies conducted in these countries to gauge the share of cash transactions in the total volume of consumer payments. Using Bayesian Model Averaging, we find strong evidence that cash prevalence affects the corruption perception. Notably, traditional macroeconomic variables show minimal impact on corruption perception, indicating that payment habits may be more influential than broader economic conditions. These findings suggest that policies promoting electronic payments could enhance transparency and reduce perceived corruption by creating traceable transaction records that limit opportunities for corrupt practices.

Suggested Citation

  • Radosław Kotkowski & Piotr Dybka & Anna Iwona Piotrowska & Leo Van Hove, 2025. "Everyday Cash Usage and Corruption Perception: Evidence From a Panel of Countries," KAE Working Papers 2025-114, Warsaw School of Economics, Collegium of Economic Analysis.
    • Handle: RePEc:sgh:kaewps:2025114
    DOI: 10.33119/kaewps2025114
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    File URL: https://hdl.handle.net/20.500.12182/1383
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    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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