New evidence on the determinants of the demand for money: An empirical study of Dutch households

Abstract

This paper reports a linear regression analysis of individual data on liquid asset holdings, income, and net worth of some 2,000 households from the 1960 Dutch Savings Survey. Four types of assets are distinguished: currency, balances with “giro” systems, balances on current account at commercial banks, and interest-bearing balances. The first conclusion is that the relative importance of income and net worth in determining asset holdings varies with the type of assets. All four categories are related to income, but only current accounts are strongly related to net worth too. The income and net worth elasticities obtained agree broadly with earlier estimates, provided the special character of the Dutch giro system is taken into account; this absorbs most of the cash balances which in other countries are held on current account at commercial banks.