An Empirical Study of Cash Payments

Jeanine Kippers, Erjen van Nierop (), Richard Paap and Philip Hans Franses
Additional contact information
Jeanine Kippers: De Nederlandsche Bank
Erjen van Nierop: Erasmus University Rotterdam

No 02-075/4, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: Anytime an individual makes a cash payment, s/he needs to think about theamount to be paid, the coins and notes which are available, and the amount ofchange. For central banks and retail stores, for example, it is of interest to un-derstand how this individual choice process works. The literature of currency useconcerns primarily theory, in the sense that, given certain assumptions, one can de-rive an optimal denomination range. There is no empirical study which deals withthe actual use of coins and notes, given a specific denomination range. In this paperwe therefore present such a study, which is based on two rather unique data sets.We use descriptive statistics and a sophisticated model, which is designed for thisspecific purpose, to see whether two basic premises of the theories on optimal rangesare valid. In contrast to the widely accepted assumptions, we find that individualsappear not to pay efficiently and that they are also not indifferent to the use of coinsand notes. In other words, some notes and coins are used less often than expectedgiven the payment situation.

Date: 2002-07-15
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.tinbergen.nl/02075.pdf (application/pdf)

Related works:
Journal Article: An Empirical Study of Cash Payments (2003)
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: https://EconPapers.repec.org/RePEc:tin:wpaper:20020075

Access Statistics for this paper

More papers in Tinbergen Institute Discussion Papers from Tinbergen Institute Contact information at EDIRC.
Bibliographic data for series maintained by Tinbergen Office +31 (0)10-4088900 ().