IDEAS home Printed from https://ideas.repec.org/p/wpa/wuwpma/0404011.html
   My bibliography  Save this paper

Transaction Technology Innovation and Demand for Overnight Deposits in Italy

Author

Listed:
  • 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, EconWPA.
  • Handle: RePEc:wpa:wuwpma:0404011
    Note: Type of Document - pdf; pages: 34
    as

    Download full text from publisher

    File URL: http://econwpa.repec.org/eps/mac/papers/0404/0404011.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mathias Drehmann & Charles Goodhart & Malte Krueger, 2002. "The challenges facing currency usage: will the traditional transaction medium be able to resist competition from the new technologies?," Economic Policy, CEPR;CES;MSH, vol. 17(34), pages 193-228, April.
    2. 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.
    3. Luca Dedola & Eugenio Gaiotti & Luca Silipo, 2001. "Money demand in the euro area: do national differences matter?," Temi di discussione (Economic working papers) 405, Bank of Italy, Economic Research and International Relations Area.
    4. Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, vol. 68(1), pages 79-113, July.
    5. Gerali, Andrea & Lippi, Francesco, 2001. "On the 'Conquest' of Inflation," CEPR Discussion Papers 3101, C.E.P.R. Discussion Papers.
    6. Paroush, Jacob & Ruthenberg, David, 1986. "Automated teller machines and the share of demand deposits in the money supply: The Israeli Experience," European Economic Review, Elsevier, vol. 30(6), pages 1207-1215, December.
    7. Alessandro Calza & Alexander Jung & Livio Stracca, 2000. "An econometric analysis of the main components of M3 in the Euro area," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(4), pages 680-701, December.
    8. Piero Cipollone, 2001. "La convergenza dei salari manifatturieri in Europa," Temi di discussione (Economic working papers) 398, Bank of Italy, Economic Research and International Relations Area.
    9. Donald D. Hester & Giorgio Calcagnini & Riccardo De Bonis, 2001. "Competition Through Innovation: ATMs in Italian Banks," Rivista italiana degli economisti, Società editrice il Mulino, issue 3, pages 359-382.
    10. Duca, John V, 2000. "Financial Technology Shocks and the Case of the Missing M2," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(4), pages 820-839, November.
    11. Stephen M. Goldfeld, 1976. "The Case of the Missing Money," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(3), pages 683-740.
    12. Domenica J. Marchetti, 1999. "Markup and the Business Cycle: Evidence from Italian Manufacturing Branches," Temi di discussione (Economic working papers) 362, Bank of Italy, Economic Research and International Relations Area.
    13. Angelini, P. & Hendry, D.F. & Rinaldi, R., 1993. "An Econometric Analysis of Money Demand in Italy," Papers 219, Banca Italia - Servizio di Studi.
    14. Bonaccorsi di Patti, Emilia & Gobbi, Giorgio, 2001. "The changing structure of local credit markets: Are small businesses special?," Journal of Banking & Finance, Elsevier, vol. 25(12), pages 2209-2237, December.
    15. Alan B. Krueger, 2001. "An Interview with William J. Baumol," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 211-231, Summer.
    16. Marchetti, D.J., 1999. "Markup and the Business Cycle: Evidence from Italian Manufacturing Branches," Papers 362, Banca Italia - Servizio di Studi.
    17. Casey B. Mulligan & Xavier Sala-I-Martin, 1992. "U.S. Money Demand: Surprising Cross-Sectional Estimates," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 285-343.
    18. Casey B. Mulligan & Xavier Sala-i-Martin, 1995. "Adoption of financial technologies: Implications for money demand and monetary policy," Economics Working Papers 134, Department of Economics and Business, Universitat Pompeu Fabra.
    19. Dario Focarelli, 2002. "Bootstrap bias-correction procedure in estimating long-run relationships from dynamic panels, with an application to money demand in the euro area," Temi di discussione (Economic working papers) 440, Bank of Italy, Economic Research and International Relations Area.
    20. Casey B. Mulligan & Xavier Sala-i-Martin, 2000. "Extensive Margins and the Demand for Money at Low Interest Rates," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 961-991, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Columba, Francesco, 2009. "Narrow money and transaction technology: New disaggregated evidence," Journal of Economics and Business, Elsevier, vol. 61(4), pages 312-325, July.

    More about this item

    Keywords

    Money demand; payment economics; transaction technology; ATM; POS.;

    JEL classification:

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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpma:0404011. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA). General contact details of provider: http://econwpa.repec.org .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.