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
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)
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (7) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Why Do People Save in Cash? Distrust, Memories of Banking Crises, Weak Institutions and Dollarization (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
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 ().