Empirical Studies on Cash Payments

Cash is still the most common means of daily payments. The large number \nof cash payments is supported by a costly distribution system in which \nretailers, banks and central banks participate. Currency is issued in a \nrange of bank note and coin denominations to facilitate efficiency in \ncash payments. \nThe purpose of this thesis is to study the performance of a currency \nrange in practice. It presents a number of empirical studies on cash \npayments at the individual payment level, whereby cash payments \nare viewed as the outcome of a choice process. This type of analysis calls \nfor labor-intensive data collection methods and the development of a \nsophisticated econometric model. This thesis introduces such a model \nfor cash payments, and it reviews its application to three unique data \nsets of cash payments. The data concern payments in the Netherlands \nbefore and after the transition from the guilder to the euro in 2002, \nand payments in an experimental setting. The estimation results \nallow for an assessment of the use of different bank note and coin \ndenominations in cash payments, and of possible preferences for one \nof more denominations. \nCurrency research generally approaches currency use from a macroeconomic \npoint of view. The novelty of this thesis is that it contributes \nto currency research by focusing on individual cash payments.