Cash Usage Research Articles

The Size of Transactions, Types of Products, and the Choice Between Electronic Payments and Cash Usage

Fueled by recent policy advancements and technological progress, India’s digital payment system is on the verge of becoming a noteworthy success story. Concurrently, data also highlights the continued reliance on cash. While broad national-level data can provide insights into overall citizen preferences, we utilize a survey-based data-set to gain insight into how factors such as ’transaction size,’ ’nature of the product,’ ’consumer perception,’ ’trust’ in digital payments, and the costs associated with digital transactions influence consumer payment behavior. While demographic factors like age and income play a role in these choices, we discover compelling evidence that an individual’s choice of digital payment methods is strongly shaped by their perception of these options, transaction size, trust, associated costs, and the product category. Notably, we observe that as transaction size increases, the use of digital payment methods tends to decrease.

The Impact of Mobile Money on Perception about Cash and Financial Inclusion: Micro-Level Evidence from Uganda

The debate about the future of cash has recently intensified as technology innovations in the financial sector accelerate digital payments and the creation of new, digital forms of money. Several countries have embraced initiatives towards cashless or cash-light payments. In Sub-Saharan Africa (SSA), mobile money has dominated the list of digital payment innovations. These innovations hold the potential to alter individuals’ behaviour towards cash. Will mobile money render cash less dominant in Africa? Can it promote financial inclusion? We address these questions by exploring individual-level data for Uganda, a country in an African region that pioneered the mobile money revolution in the world. We use the Propensity Score Matching method to robustly compare mobile money users and non-users across various indicators that capture individuals’ perceptions about cash, and the extent to which they remit, save, and borrow money. We present the first evidence that mobile money users, compared to non-users, are more likely to perceive cash as risky and less likely to prefer carrying large amounts of cash. We also confirm that mobile money users are more likely to receive and send remittances, save, and borrow. They also save and borrow larger amounts. The estimation methodology used in the paper, robustness analysis, and a falsification test help reduce potential concerns about selection bias and reverse causality. Two implications emerge from the findings. First, the rapid expansion of fintech technologies in Africa is likely to reduce, although slowly, the demand for and usage of cash over time. Second, the expansion of fintech technologies could help promote financial inclusion in Africa

Litigation risk and corporate cash holdings: The moderating effect of CEO tenure

Cash holdings represent a crucial decision that can affect the efficiency of a firm's cash usage and, ultimately, shareholder value. Taking advantage of a comprehensive sample of China's A-share listed companies from 2012 to 2022, this research examines the relationship between litigation risk and corporate cash holdings. In line with the precautionary motive, we discover robust evidence that litigation risk is positively correlated with corporate cash holdings. Moreover, we document that the positive relationship is more pronounced for firms with long-tenured CEOs, as they are more risk averse. Our findings are robust to a series of sensitivity analyzes. Overall, this study contributes to the literature on litigation risk and corporate cash holdings, and generates valuable practical implications for investors, managers, and policymakers.

Nexus between payments digitalization and cash usage in the Philippines

Nexus between payments digitalization and cash usage in the Philippines

The Effect of E-Commerce on Gross Regional Domestic Product and Clustering of Its Characteristics by Utilizing Official Statistics and Big Data

The objective of this study is to examine the impact of e-commerce on Gross Regional Domestic Product (GRDP) and categorize GRDP according to e-commerce features in 17 provinces throughout Java, Sumatra, and Bali. The Human Development Index (HDI), which measures people's proficiency with technology—among which is e-commerce—is greatest on these three islands. This study makes use of big data in the form of Google Trends data as well as official statistics data obtained from the BPS-Statistics Indonesia. K-means clustering and regression analysis are the research methods employed. The study's findings demonstrate that the three islands' GDP growth rates are considerably accelerated by e-commerce companies. There were two ideal clusters identified: the low and high GRDP clusters. All of the provinces on the island of Java are included in the high cluster, with the exception of Central Java, which is distinguished by high transaction values and e-commerce-related keyword searches. Provinces in the low cluster are located on the Indonesian islands of Sumatra and Bali, and they are distinguished by the usage of Cash on Delivery (COD) and a limited number of employees in e-commerce businesses.

TRENDOVI I ODREDNICE UPORABE GOTOVINE U DRŽAVAMA ČLANICAMA EU IZVAN EUROZONE

Technological progress and digital innovations changes consumer payment habits worldwide. Although cash payments are still predominant payment method in European countries, a decreasing trend is observed. Simplicity and accessibility of non-cash ways of payments, along with decreasing availability and restrictions on the use of cash, threaten to push cash from circulation. On the other hand, European Central Bank expressed the importance of cash as a store of value and reliable payment instrument that should be available to all eurozone citizens. The aim of this paper is to analyse the trends and determinants of cash usage in 8 non-euro zone European union countries over the 2013 – 2021 period, based on set of selected indicators. The result show heterogeneity within the group, but with a common downward trend, and the significant influence of technological and sociocultural indicators on cash usage.

OPTIMAL CENTRAL BANK DIGITAL CURRENCY DESIGN FOR EMERGING ECONOMIES

The growth of digitalisation presents the possibility for Central Bank Digital Currency (CBDC) to emerge as a secure and efficient payment method. However, despite the benefits, CBDC implementation needs to be adapted to the capabilities and needs of each country. This study uses meta-strength, weakness, opportunity, and threat (meta-SWOT) analysis to assess the internal strengths and weaknesses, as well as the external opportunities and threats, to determine the most optimal CBDC design for emerging economies. In analysing internal aspects, CBDC allows for an efficient payment system, followed by a more effective monetary policy. Furthermore, the technology creates the possibility to boost financial inclusion and trace many illicit activities. However, to achieve that, high investment costs and privacy issues must be accommodated, followed by technological risks such as the digital divide and electrical outages. Turning to external aspects, growing technology, the network effect, enthusiasm for CBDC, and the impracticality of cash usage have become catalysts for CBDC development. Despite these opportunities, central banks should be wary of the threat of cyberattacks, quickening bank disintermediation, legal issues within their respective countries, and competition with private crypto companies. Altogether, the most optimal CBDC design in emerging economies is retail and wholesale coverage, interest-bearing (wholesale) and noninterest-bearing (retail) remuneration, account-based and token-based paymentsystems, a traceable degree of anonymity, hybrid architecture, a Decentralised Ledger Technology (DLT) ledger system, and domestic and cross-border scope. These results are supported by rigorous examination of global CBDC research and development.

Gender and Racial Behavior in Consumer Payment Methods under Economic Uncertainty

This paper analyzes the effects of high economic uncertainty on racial and gender behavior in payment methods. Using US consumer transaction-level data, we find that consumers alter their payment behavior patterns in periods of high economic uncertainty by moving away from costly and risky payment methods with high interest rates, such as credit cards. We find that females reduce their cash usage but increase their credit card usage relative to males, thus exposing themselves to higher financial vulnerability. We find no major differences in payment behavior between Blacks and Whites.

An Analysis of Cash Management with Reference to Deccan Industries

Cash management refers to a broad area of finance involving the collection, handling, and usage of cash. It involves assessing market liquidity, cash flow, and investments. In banking, cash management, or treasury management, is a marketing term for certain services related to cash flow offered primarily to larger business customers. It may be used to describe all bank accounts (such as checking accounts) provided to businesses of a certain size, but it is more often used to describe specific services such as cash concentration, zero balance accounting, and automated clearing house facilities. Sometimes, private banking customers are given cash management services. Financial instruments involved in cash management include money market funds, treasury bills, and certificates. Cash management essentially means dealing with an organization's cash so its use provides the most value to the business. This can mean planning to keep the right amount of cash on hand as well as making plans for the cash the company does not need to have available for business operations. Cash managers plan for, protect, and invest cash assets. Basic parts of planning for efficient cash management include knowing how much cash should be on hand, efficiently handling cash transactions, and investing any surplus cash in securities that will grow the value of the company's money.

Offenders’ perspectives on acquisitive crime targets and stolen goods disposal methods

This paper examines offenders’ perspectives about acquisitive crime targets and stolen goods markets in Australia that have not been comprehensively reviewed since 2005. Over the last 18 years there have been significant changes in the rates of property crime, reductions in cash usage, and rapid movements to online markets as a disposal outlet, that motivate this updated analysis. In late 2022, n = 107 detainees in a Western Australian police watchhouse were interviewed about their property offending frequency, offence preferences, target selection, disposal methods, and estimated financial return for targeted goods. Results demonstrated (a) meaningful shifts towards shoplifting and away from the other stealing offences, (b) increases in stealing for personal consumption rather than selling on, (c) declines in preferences for small electronic items, (d) ongoing dependence on drug dealers as a preferred outlet for off-loading stolen goods, (e) disposal of stolen goods is still quick, easy, and typically offenders receive about one-third of the original purchase price for items, and (f) growth in the use of online markets to dispose of stolen goods. The theoretical and applied implications of these findings are discussed, emphasising the importance of opportunity-focused interventions to prevent crime.

Paying in a blink of an eye: it hurts less, but you spend more

The key objective of this research is to gain a deeper understanding of the factors associated with pain of paying and to extend knowledge of the consequences. Using rich consumer survey data on the Netherlands, we find that electronic payments – both online and offline – hurt less than cash payments. This holds especially for contactless payments and iDEAL payments, a frequently used online payment method in the Netherlands, and for older people in particular but not for teenagers. Furthermore, the perceived pain of paying is positively related to the price of the product or service and slightly lower for an outing compared to grocery shopping. In addition, the pain is relatively high for individuals that are likely to value money more, such as people who find it hard to make ends meet with their income. On average, cash is perceived to be most helpful in preventing overspending, whereas contactless payments are the least helpful. The lower the perceived pain of paying contactless is in comparison to the pain associated with other payment methods, the lower its perceived usefulness in preventing overspending. Moreover, the intensity of use of contactless payments is negatively correlated with the relative pain of paying contactless, which suggests that people try to avoid the pain of paying. As the usage of cash is declining, it is important that policymakers develop tools that help consumers in averting overspending when utilizing electronic payment methods, particularly contactless ones.

Analysis of Cash Usage, Preferences and Perceptions on Euro Banknotes of the Maltese public

Analysis of Cash Usage, Preferences and Perceptions on Euro Banknotes of the Maltese public

The Use of Electronic Money as a Transaction System in Indonesia

Advancements in technology during the 4.0 era promise significant benefits for human civilization. This study focuses on the technological evolution of digital payment methods, specifically electronic money (e-money), in Indonesia's digital economy landscape. E-money, utilizing electronic devices like chips or servers, serves as a cashless payment alternative, contributing to a notable decline in cash usage. The proliferation of e-money is evident in Indonesia, driven by startups and competition among key players like Gojek, OVO, and Shopee. The research employs qualitative methods, including a descriptive approach and literature survey, drawing insights from various sources such as books, journals, and prior research. While the adoption of e-money has surged, particularly for its convenience, security, and speed in digital transactions, challenges persist in remote parts of Indonesia where cash remains prevalent. Recognizing this, Bank Indonesia collaborates with institutions to promote non-cash transactions, striving towards a cashless society.

What Influences Kathmandu Valley Users' Attitudes Toward Plastic Money: Evidence from an Ordered Logistic Model

The use of plastic money has grown over time. Previously availed by a few, the use of plastic money amongst people with bank accounts has surged tremendously. In 2020, it was discovered that over 78 lakh individuals in Nepal utilized plastic money. This study aims to analyse determining factors that affect users’ attitude toward plastic money in Kathmandu valley. The Kathmandu valley was chosen as the study location because people from many workgroups and locations travel here in quest of varied opportunities, resulting in a diverse range of viewpoints. Both primary and secondary data were used for gathering relevant information. Questionnaire of structured type was developed to gather the response from 404 respondents and convenient sampling method was employed for the selection of respondents. The data collected was analysed using ordered logistic regression. Findings from the study indicated that 95.79% respondents have knowledge regarding plastic money and users carry a positive attitude towards use of plastic money. However, if banks would enhance their ATM services, then respondents are more likely to use plastic money. This study thus concludes that though awareness about plastic money is gender neutral, however, males prefer to use plastic money more than female. Hence, the convenience, security and incentives brought in by cards over scores cash usage.

Physical Frictions and Digital Banking Adoption

The behavioral literature suggests that minor frictions can elicit desirable behavior without obvious coercion. Using closures of ATMs in a densely populated city as an instrument for small frictions to physical banking access, we find that customers affected by ATM closures increase their usage of the bank’s digital platform. Other spillover effects of this adoption of financial technology include increases in point-of-sale transactions, electronic funds transfers, automatic bill payments and savings, and a reduction in cash usage. Our results show that minor frictions can help overcome the status quo bias and facilitate significant behavior change. This paper was accepted by David Sraer, finance. Supplemental Material: Data and the online appendix are available at https://doi.org/10.1287/mnsc.2023.4972 .

Financial literacy and cash holdings in Türkiye

This paper examines the effect of financial literacy level on cash holdings in Turkey. Utilizing the Methods of Payment Survey, which includes both financial literacy and cash-related data, we first investigate the fundamentals of financial literacy in Turkey. Based on the performance on financial literacy questions, we categorize respondents into three groups. Subsequently, we analyze how cash holding behavior differs among financial literacy groups. Our results reveal that financially literate respondents tend to hold less cash on hand and store more cash elsewhere. Moreover, card ownership increases through financial literacy and the change in payment behavior of financially literate respondents is more significant during Covid-19 pandemic. The results imply that promoting financial literacy may result in less cash usage at points of sale accompanied by the currency in circulation growth, due to the overwhelming effect of increased non-transactional demand following a positive change in financial literacy level.

Cash usage in Poland in 2020: Insights into the role of the COVID-19 pandemic and spatial aspects

The study explores the factors likely to induce Polish customers to pay by cash, instead of payment cards, for goods and services they are purchasing. The basis of our investigation is microdata obtained in 2020, during the “Payment Habits in Poland in 2020” study, which was conducted by Narodowy Bank Polski (National Bank of Poland) in 2020. The analysis is performed using the two-stage Heckman approach. In the first stage, card adoption factors are analyzed using a probit model; then, in the second stage, the OLS model is employed to analyze the propensity to pay by cash, despite having a payment card. Apart from typical factors affecting the use of different payment methods, e.g., age, income, education, or perceptions about payment methods, we find an important role of two, yet under-investigated factors, namely: the COVID-19 pandemic and spatial aspects. E.g., we find that self-reported change in payment behavior during the pandemic indeed was reflected in diary studies. Furthermore, we show that instances of merchants’ refusal to accept cash significantly impacted payment choices. Moreover, the results indicate significant spatial heterogeneity in payment behavior and that aspects like distance to the nearest ATM impacted cash usage, as more cash is used when ATMs are farther away, illustrating the concept of "cash burns." Lastly, it has been noticed that during the pandemic, ownership of contactless payment cards significantly reduced cash usage, most probably due to the fear of contracting the disease by physical contact with surfaces (like cash).

Mobility restrictions and payment choices: The case of the Covid-19 pandemic

This paper examines the impact of the Covid-19 mobility restrictions on the payment choices at brick-and-mortar establishments. The asymmetries in the implementation of the Covid-19 mobility restrictions across the Spanish provinces serves as a quasi-natural experiment. The findings show that the severity of the mobility restrictions had an impact on payment choices. Individuals in areas with more stringent restrictions were less likely to use cash. The effect of the mobility restrictions on cash usage was larger among those with lower financial education. However, the severity of the mobility restrictions did not significantly affect the adoption of the most sophisticated digital payment methods like digital wallets. Consumer concerns about Covid-19 transmission through cash did not drive these results. Using a recent survey conducted in a post-pandemic context, where mobility restrictions have been lifted, the impact of mobility restrictions on cash usage has persisted. The main results hold after several robustness tests.

Flood Insurance, Building Codes, and Public Adaptation: Implications for Airport Investment and Financial Constraints

This paper investigates the impact of flood management policies on airport investment and the resulting financial constraints. Specifically, it examines the effects of flood insurance, building codes, and public adaptation investment on the investment decisions of 100 United States airports located in flood-prone areas. The paper estimated the financial loss from extreme precipitations and flooding using novel data from the United States Federal Emergency Management Agency, and a differences-in-differences framework leveraging the introduction of the 2012 Biggert–Waters reform of the National Flood Insurance Program. The findings reveal that while flood insurance costs negatively influence overall airport investment, they do not significantly affect investment–cash sensitivity. On the other hand, the introduction of stricter building codes and public adaptation investment leads to increased cash usage for investment purposes, particularly among airports exposed to extreme precipitation and flood risks. Furthermore, the analysis suggests that the observed increase in financial constraints resulting from stricter building codes and public adaptation investment is likely driven by the asymmetry of information rather than the materiality of flood risk. In other words, public investment in flood risk reduction appears to signal to investors that the airport is exposed to flood risk, potentially leading to increased financial constraints. This finding highlights the importance of considering information asymmetry when assessing the impact of flood management policies on financial constraints. Understanding the underlying drivers of these effects is crucial for supporting resilient infrastructure development and informing effective decision-making in flood-prone areas.

Consumer behaviour and credit supply: Evidence from an Australian FinTech lender

Using a proprietary dataset from an Australian leading FinTech lender, we provide insights into the effect of consumer behaviour on FinTech lending patterns. Out of seven consumption categories, gambling expenses significantly reduce the lender's willingness to fulfill loan requests. Cash usage and repeated borrowing are related to lower offer-to-requested loan ratios. The FinTech lender prefers to lend to borrowers who are married, have dependents and/or aged over 30. However, for such mature borrowers, cash usage and repeated borrowing increasingly reduce the approval likelihood of their loan requests. Taken together, our empirical evidence suggests that consumer behaviour affects FinTech lending decisions.