Does crime influence the merchants' preference for cash? Evidence from France

Bruno Karoubi ()
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Bruno Karoubi: ESC Rouen

Economics Bulletin, 2012, vol. 32, issue 4, 3449-3459

Abstract: This paper is an attempt to determine whether crime as an environmental factor has a significant impact on merchant preference for cash. I exploit a unique database from a representative sample of merchants and show that crime has a twofold impact on the merchant subjective preference for cash. I build an indicator composed of theft variables concerning primarily both consumers and merchants. I find that a merchant whose store is located in a department in which my indicator is high has Ceteris Paribus a lower than average preference for cash. I also find that a higher level of financial fraud increases it. The first effect is interpreted to be the result of a precaution motive (cash payment and storage involve risk of loss and theft), while the second results from adverse selection (cash payments make tax evasion easier).

Keywords: Payment Instruments; Crime (search for similar items in EconPapers)
JEL-codes: E0 (search for similar items in EconPapers)
Date: 2012-12-20
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Citations: View citations in EconPapers (3)

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