Cash remains top-of-wallet! International evidence from payment diaries
Arango-Arango, Carlos A.,
Martina Eschelbach and
Lola Hernandez ()
Economic Modelling, 2018, vol. 69, issue C, 38-48
In recent years, many studies have emphasized the cost-saving potential of electronic payments. Yet, cash is still heavily used to pay for point-of-sale transactions in many developed economies. We introduce a model of optimal cash holdings and payments that exploits survey payment diaries from Austria, Canada, France, Germany, the Netherlands and the United States. Our results provide evidence that differences in incentives, such as the relative cost of cards compared with cash, and differences in ATM withdrawal costs, are key factors explaining why cash remains top-of-wallet across many developed economies. Indeed, we show that once obtained, cash goes first because it ”burns” in consumers’ wallets.
Keywords: Cash management; Money demand; Payment instruments; ATM access (search for similar items in EconPapers)
JEL-codes: C61 E41 E42 E47 E58 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:69:y:2018:i:c:p:38-48
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