EconPapers    
Economics at your fingertips  
 

ATM networks and cash usage

Heli Snellman and Matti Virén

No 21/2006, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: This paper deals with the issue of how the market structure in banking affects the choice of means of payment.In particular, the demand for cash is analysed from this point of view.The analysis is based on a simple spatial transactions model in which the banks' optimization problem is solved.The solution quite clearly shows that monopoly banks have an incentive to restrict the number of ATMs to a minimum.In general, the number of ATMs depends on competitiveness in the banking sector.The predictions of the theoretical analysis are tested using panel data from 20 OECD countries for the period 1988-2003.Empirical analysis reveals that there is a strong and robust relationship between the number of ATM networks and the number of ATMs (in relation to population).It also reveals that the demand for cash depends both on the number of ATMs and ATM networks and on the popularity of other means of payment.Thus, the use of cash can be fairly well explained in a transaction demand framework, assuming proper controls for market structure and technical environment.

Keywords: automated teller machine; demand for cash; banking; means of payment (search for similar items in EconPapers)
JEL-codes: E41 E51 (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/212046/1/bof-rdp2006-021.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp2006_021

Access Statistics for this paper

More papers in Bank of Finland Research Discussion Papers from Bank of Finland Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics (econstor@zbw-workspace.eu).

 
Page updated 2023-11-08
Handle: RePEc:zbw:bofrdp:rdp2006_021