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Transaction Technology Innovation and Demand for Overnight Deposits in Italy

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  • Francesco Columba

    (Bank of Italy)

Abstract

The rapid diffusion of ATM and POS during the last decade may have changed money demand patterns; therefore, standard econometric analysis of money demand that do not account for these developments may suffer from a potentially serious omitted variable problem. This paper analyzes the effect of transaction technology innovation on overnight (i.e. demand) deposits. Using panel data for Italy we have two results. First, transaction technology innovation has a positive effect on demand deposits. Second, accounting for this innovation in the regressions significantly reduces the income elasticity of money demand typically detected in the existing empirical estimates.

Suggested Citation

  • Francesco Columba, 2004. "Transaction Technology Innovation and Demand for Overnight Deposits in Italy," Macroeconomics 0404011, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0404011
    Note: Type of Document - pdf; pages: 34
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    Cited by:

    1. Columba, Francesco, 2008. "The speed of euro adoption," Journal of International Money and Finance, Elsevier, vol. 27(2), pages 249-259, March.
    2. Columba, Francesco, 2009. "Narrow money and transaction technology: New disaggregated evidence," Journal of Economics and Business, Elsevier, vol. 61(4), pages 312-325, July.

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    More about this item

    Keywords

    Money demand; payment economics; transaction technology; ATM; POS.;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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