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The effects of negative interest rates on cash usage: Evidence for EU countries

Liñares-Zegarra, José M and Willesson, Magnus (2021) 'The effects of negative interest rates on cash usage: Evidence for EU countries.' Economics Letters, 198. p. 109674. ISSN 0165-1765

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Abstract

Changes in interest rates below the zero lower bound could have potential effects on the payments market by making cash more attractive for consumers as a medium of payment and wealth storage. This paper studies how cash usage has been affected by the recent introduction of negative interest rates in European countries. Using a difference-in-differences methodology over the period 2006 - 2018, results show an increase in cash usage in negative interest-rate environments. We also find that the increase in cash usage was less pronounced in countries with superior monitoring capacity of banks (i.e. high levels of financial intermediation).

Item Type: Article
Uncontrolled Keywords: Negative interest rates; Europe; Cash; Bank monitoring; Financial intermediation
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Essex Business School
Faculty of Social Sciences > Essex Business School > Essex Finance Centre
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 27 Nov 2020 16:51
Last Modified: 25 May 2022 01:00
URI: http://repository.essex.ac.uk/id/eprint/29207

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