Arbeitspapier

Cash in hand and savings decisions

Cash is an important means of transaction, generally assumed to be fungible. However, behavioral economics and consumer research show that 'cash in hand', physically holding on to cash and then handing it away, affects purchasing decisions. I study how cash in hand influences decisions in a different but very important domain: savings. Savings accounts are a promising tool for reducing poverty, but the use of savings accounts is often puzzlingly low. Holding on to cash that needs to be physically deposited into a savings account may increase the psychological costs of saving. This study experimentally identifies the causal effect of cash in hand on savings deposits of microfinance clients in the Philippines. In contrast to many laboratory and several field studies with similar interventions, I do not find reduced savings deposits due to cash in hand. I discuss reasons for and consequence of this surprising finding, in particular for developing economics where lots of transactions are still cash-based.

Language
Englisch

Bibliographic citation
Series: Discussion Paper ; No. 180

Classification
Wirtschaft
Micro-Based Behavioral Economics: General‡
Design of Experiments: General
Behavioral Finance: General‡
Subject
Cash
Savings
Experiment

Event
Geistige Schöpfung
(who)
Spantig, Lisa
Event
Veröffentlichung
(who)
Ludwig-Maximilians-Universität München und Humboldt-Universität zu Berlin, Collaborative Research Center Transregio 190 - Rationality and Competition
(where)
München und Berlin
(when)
2019

Handle
Last update
10.03.2025, 11:42 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Spantig, Lisa
  • Ludwig-Maximilians-Universität München und Humboldt-Universität zu Berlin, Collaborative Research Center Transregio 190 - Rationality and Competition

Time of origin

  • 2019

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