An Analysis of the Demand forCash in Korea (in Korean)

Byoung Hark Yoo ()
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Byoung Hark Yoo: Institute for Monetary and Economic Research, The Bank of Korea

Economic Analysis (Quarterly), 2007, vol. 13, issue 1, 150-179

Abstract: The ratio of cash to consumption fell sharply in Korea in 1999 and has since stayed well below its long term trend. This paper shows that this sudden one-time decrease in cash demand was due to an increase in credit card use and that the rise in credit card payments resulted from a tax policy first introduced in 1999 that provided tax deductions for credit card holders on their credit card payments. Without the policy, the ratio of cash to consumption would have remained around its long term average. Meanwhile, the use of 100,000-won cashier's cheques, which circulate widely as quasi-cash in Korea, has decreased over the long-term. The empirical analysis presented shows that the demand for cashier's checks has been declining as the use of electronic payments expands.

Keywords: Cash Demand; Credit Cards; Non-cash Payment (search for similar items in EconPapers)
JEL-codes: E41 E58 (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:bok:journl:v:13:y:2007:i:1:p:150-179

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