EconPapers    
Economics at your fingertips  
 

Why do people save in cash? Distrust, memories of banking crises, weak institutions and dollarization

Helmut Stix ()

Journal of Banking & Finance, 2013, vol. 37, issue 11, pages 4087-4106

Abstract: The paper analyzes why households hold sizeable shares of their assets in cash at home rather than at banks – a phenomenon that is widespread in many economies but for which information is scarce. Using survey data from ten Central, Eastern and Southeastern European countries, I document the relevance of this behavior and show that cash preferences cannot be fully explained by whether people are banked or unbanked. The analysis reveals that a lack of trust in banks, memories of past banking crises and weak tax enforcement are important factors. Moreover, cash preferences are stronger in dollarized economies where a “safe” foreign currency serves as a store of value.

Keywords: Cash demand; Cash hoarding; Household finance; Trust in banks; Social capital; Dollarization (search for similar items in EconPapers)
JEL-codes: E41 O16 G11 D12 P34 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378426613002859
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Why Do People Save in Cash? Distrust, Memories of Banking Crises, Weak Institutions and Dollarization (2012) Downloads
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: http://EconPapers.repec.org/RePEc:eee:jbfina:v:37:y:2013:i:11:p:4087-4106

Access Statistics for this article

Journal of Banking & Finance is currently edited by Ike Mathur

More articles in Journal of Banking & Finance from Elsevier
Series data maintained by Zhang, Lei ().

 
Page updated 2014-10-09
Handle: RePEc:eee:jbfina:v:37:y:2013:i:11:p:4087-4106