IDEAS home Printed from https://ideas.repec.org/a/bla/devchg/v49y2018i2p420-436.html
   My bibliography  Save this article

The Financialization of Finance? Demonetization and the Dubious Push to Cashlessness in India

Author

Listed:
  • C.P. Chandrasekhar
  • Jayati Ghosh

Abstract

This Debate contribution describes the promotion of digital rather than cash payments as a form of the financialization of finance, in its role as a payments system, with reference to recent Indian experience. The arguments in favour of reducing cash usage must be seen relative to the costs of digital payments, for both society and individuals. The drastic demonetization episode in India, which removed 86 per cent of the value of notes in circulation at one stroke in November 2016, was partly justified in terms of forcing a shift to cashless transactions. However, such a shift requires that adequate infrastructure be in place in terms of banking and connectivity, both of which are currently lacking in India. The article also identifies other concerns with digital transactions including higher costs and the possibilities of loss of privacy, fraud, identity theft and surveillance. The obsession with digital transactions as a marker of social and material progress is misplaced; it may become yet another means by which finance extracts rentier incomes out of relatively poor populations.

Suggested Citation

  • C.P. Chandrasekhar & Jayati Ghosh, 2018. "The Financialization of Finance? Demonetization and the Dubious Push to Cashlessness in India," Development and Change, International Institute of Social Studies, vol. 49(2), pages 420-436, March.
    • Handle: RePEc:bla:devchg:v:49:y:2018:i:2:p:420-436
    DOI: 10.1111/dech.12369
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/dech.12369
    Download Restriction: no
    File URL: https://libkey.io/10.1111/dech.12369?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Kenneth S. Rogoff, 2016. "The Curse of Cash," Economics Books, Princeton University Press, edition 1, number 10798.
    2. Demirguc-Kunt,Asli & Klapper,Leora & Singer,Dorothe & Van Oudheusden,Peter, 2015. "The Global Findex Database 2014 : measuring financial inclusion around the world," Policy Research Working Paper Series 7255, The World Bank.
    3. Schmiedel, Heiko & Kostova, Gergana & Ruttenberg, Wiebe, 2012. "The social and private costs of retail payment instruments: a European perspective," Occasional Paper Series 137, European Central Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Meghna Goyal, 2024. "Book review: Satyaki Roy, Contours of Value Capture: India’s Neoliberal Path of Industrial Development," Agrarian South: Journal of Political Economy, Centre for Agrarian Research and Education for South, vol. 13(1), pages 141-146, March.
    2. Sedai, Ashish Kumar & Nepal, Rabindra & Jamasb, Tooraj, 2021. "Flickering lifelines: Electrification and household welfare in India," Energy Economics, Elsevier, vol. 94(C).
    3. Ashish Kumar Sedai, Rabindra Nepal, and Tooraj Jamasb, 2022. "Electrification and Socio-Economic Empowerment of Women in India," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    4. Xue, Qing & Liu, Xiangqin, 2024. "Can digital finance boost corporate green innovation," Finance Research Letters, Elsevier, vol. 62(PB).
    5. Ioannis Chatziantoniou & David Gabauer & Hardik A. Marfatia, 2022. "Dynamic connectedness and spillovers across sectors: Evidence from the Indian stock market," Scottish Journal of Political Economy, Scottish Economic Society, vol. 69(3), pages 283-300, July.
    6. Thereza Balliester Reis, 2022. "Socio‐economic determinants of financial inclusion: An evaluation with a microdata multidimensional index," Journal of International Development, John Wiley & Sons, Ltd., vol. 34(3), pages 587-611, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dominika Kolcunova & Tomas Havranek, 2018. "Estimating the Effective Lower Bound on the Czech National Bank’s Policy Rate," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 68(6), pages 550-577, December.
    2. Shy, Oz, 2021. "Cashless stores and cash users," Journal of Policy Modeling, Elsevier, vol. 43(3), pages 622-638.
    3. Françoise Vasselin, 2018. "The Competition Between Cash and Mobile Payments in Markets with Mobile Partnerships A Monetary Search Model Point of View," Working Papers hal-01722404, HAL.
    4. Shy, Oz, 2020. "Low-income consumers and payment choice," Research in Economics, Elsevier, vol. 74(4), pages 292-300.
    5. Codruta Rusu & Helmut Stix, 2017. "Von Bar- und Kartenzahlern – Aktuelle Ergebnisse zur Zahlungsmittelnutzung in Österreich," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 54-85.
    6. Morscher, Christof & Schlothmann, Daniel & Horsch, Andreas, 2017. "Bargeld quo vadis?," Freiberg Working Papers 2017/01, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
    7. Codruta Rusu & Helmut Stix, 2017. "Cash and card payments – recent results of the Austrian payment diary survey," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1/17, pages 1-35.
    8. José Bran-Guevara & Luisa Fernanda Hernández-Ávila & Daniela McAllister-Harker, 2022. "Servicios Financieros Digitales en Colombia: Una caracterización y análisis de riesgos potenciales," Borradores de Economia 1193, Banco de la Republica de Colombia.
    9. Noelia Camara & Enestor Dos Santos & Francisco Grippa & Javier Sebastian & Fernando Soto & Cristina Varela, 2018. "Monedas digitales emitidas por bancos centrales: una valoracion de su adopcion en LatAm," Working Papers 18/05, BBVA Bank, Economic Research Department.
    10. Françoise Vasselin, 2018. "The Competition Between Cash and Mobile Payments in Markets with Mobile Partnerships A Monetary Search Model Point of View," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01722404, HAL.
    11. König, Jörg, 2016. "Bares bleibt Wahres: Bargeld als Garant für Freiheit und Eigentum," Argumente zur Marktwirtschaft und Politik 136, Stiftung Marktwirtschaft / The Market Economy Foundation, Berlin.
    12. Bruna Bruno & Marisa Faggini, 2022. "The cashless man: do preferences matter?," Journal of Evolutionary Economics, Springer, vol. 32(5), pages 1525-1544, November.
    13. Hamidou Jawara, 2020. "Access to savings and household welfare evidence from a household survey in The Gambia," African Development Review, African Development Bank, vol. 32(2), pages 138-149, June.
    14. Geng, Xin & Janssens, Wendy & Kramer, Berber, 2018. "Liquid milk: Cash Constraints and Recurring Savings among Dairy Farmers in Kenya," 2018 Annual Meeting, August 5-7, Washington, D.C. 273823, Agricultural and Applied Economics Association.
    15. Francis Annan, 2017. "Fraud on Mobile Financial Markets: Evidence from A Pilot Audit Study," Working Papers 17-16, NET Institute.
    16. Junius, Kerstin & Devigne, Lucas & Honkkila, Juha & Jonker, Nicole & Kajdi, László & Rusu, Codruta & Kimmerl, Johana & Korella, Lukas & Matos, Rodrigo & Menzl, Nadine & Przenajkowska, Karolina & Reije, 2022. "Costs of retail payments – an overview of recent national studies in Europe," Occasional Paper Series 294, European Central Bank.
    17. Charles M. Kahn & Francisco Rivadeneyra & Tsz-Nga Wong, 2018. "Should the Central Bank Issue E-money?," Staff Working Papers 18-58, Bank of Canada.
    18. Ajefu, Joseph B. & Massacky, Falecia, 2023. "Mobile money, child labour and school enrolment," Telecommunications Policy, Elsevier, vol. 47(10).
    19. Ongo Nkoa, Bruno Emmanuel & Song, Jacques Simon, 2020. "Does institutional quality affect financial inclusion in Africa? A panel data analysis," Economic Systems, Elsevier, vol. 44(4).
    20. Bruno Karoubi & Régis Chenavaz & Corina Paraschiv, 2016. "Consumers’ perceived risk and hold and use of payment instruments," Applied Economics, Taylor & Francis Journals, vol. 48(14), pages 1317-1329, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:devchg:v:49:y:2018:i:2:p:420-436. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0012-155X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.