Using Cash to Monitor Liquidity: Implications for Payments, Currency Demand, and Withdrawal Behavior

Journal of Money, Credit and BankingVolume 46, Issue 8 p. 1753-1786 Article Using Cash to Monitor Liquidity: Implications for Payments, Currency Demand, and Withdrawal Behavior ULF VON KALCKREUTH, ULF VON KALCKREUTHSearch for more papers by this authorTOBIAS SCHMIDT, TOBIAS SCHMIDTSearch for more papers by this authorHELMUT STIX, HELMUT STIXSearch for more papers by this author ULF VON KALCKREUTH, ULF VON KALCKREUTHSearch for more papers by this authorTOBIAS SCHMIDT, TOBIAS SCHMIDTSearch for more papers by this authorHELMUT STIX, HELMUT STIXSearch for more papers by this author First published: 21 November 2014 https://doi.org/10.1111/jmcb.12165Citations: 37 We thank the editor, and two anonymous referees, Kim P. Huynh, and Heinz Herrmann for very helpful comments. This paper represents the authors' personal opinions and does not necessarily reflect the views of the Deutsche Bundesbank, the Oesterreichische Nationalbank, or their staff. Read the full textAboutRelatedInformationPDFPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessClose modalShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Abstract This paper provides one explanation why cash is still used for transactions despite a broad diffusion of noncash payment instruments. In particular, we argue that a distinctive feature of cash—a glance into one's pocket gives a signal of the remaining budget and past expenses—provides utility to some consumers. Using payment survey data, we show that consumers who need to keep control over their remaining liquidity and who have elevated costs of information processing conduct a larger percentage of payments using cash, withdraw less often, and hold larger cash balances than other consumers. Citing Literature Volume46, Issue8December 2014Pages 1753-1786 RelatedInformation RecommendedMobile Payments, Digital Cash and Value StoresBank 3.0: Why Banking Is No Longer Somewhere You Go, But Something You Do, [1]Liquidity and LeverageFinancial Risk Management: Models, History, and Institutions, [1]Card PaymentsThe Handbook of Banking Technology, [1]Cash versus Debit Card: The Role of Budget ControlLola Hernandez, Nicole Jonker, Anneke Kosse, Journal of Consumer AffairsCash and Liquidity ManagementValue and Capital Management: A Handbook for the Finance and Risk Functions of Financial Institutions, [1]