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Retail payments and the real economy

Author

Listed:
  • Zhang, Yanying
  • Zhang, Gaiyan
  • Liu, Liuling
  • De Renzis, Tania
  • Schmiedel, Heiko

Abstract

This study investigates how retail payment methods affect aggregate macroeconomic activity. By tracing the relative norms and practices of paper-based payment instruments (checks) and electronic payment methods (payment cards, credit transfers and direct debits) in 27 European Union member countries, the paper reports that a higher penetration ratio of electronic payment methods is generally associated with greater GDP, trade, consumption and tax revenue. The 2008 financial crisis and a country’s shadow economy level have an incremental impact on the relationship between payment methods and economy. The study also finds substitution effects between paper-based and electronic payment methods and complementary effects across electronic payment methods. The findings are robust after controlling for endogeneity. Our study supports policies promoting further repositioning and transfer to efficient electronic payment instruments.

Suggested Citation

  • Zhang, Yanying & Zhang, Gaiyan & Liu, Liuling & De Renzis, Tania & Schmiedel, Heiko, 2019. "Retail payments and the real economy," Journal of Financial Stability, Elsevier, vol. 44(C).
    • Handle: RePEc:eee:finsta:v:44:y:2019:i:c:s1572308918301475
    DOI: 10.1016/j.jfs.2019.100690
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    Citations

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    Cited by:

    1. Kotkowski, Radoslaw & Polasik, Michal, 2021. "COVID-19 pandemic increases the divide between cash and cashless payment users in Europe," Economics Letters, Elsevier, vol. 209(C).
    2. Oleksandr Melnychenko, 2021. "Energy Losses Due to Imperfect Payment Infrastructure and Payment Instruments," Energies, MDPI, vol. 14(24), pages 1-20, December.
    3. Huosong Xia & Yangmei Gao & Justin Zuopeng Zhang, 2023. "Understanding the adoption context of China’s digital currency electronic payment," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-27, December.
    4. Vivien Deak & Kristof Takacs, 2023. "A New Vision for Electronic Payments in Hungary - the Payments 2030 Strategy," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 22(3), pages 152-165.
    5. David Bounie & Youssouf Camara, 2020. "Card-Sales Response to Merchant Contactless Payment Acceptance," Post-Print hal-02296302, HAL.
    6. Bounie, David & Camara, Youssouf, 2020. "Card-sales response to merchant contactless payment acceptance," Journal of Banking & Finance, Elsevier, vol. 119(C).
    7. Carbó-Valverde, Santiago & Cuadros-Solas, Pedro J. & Rodríguez-Fernández, Francisco & Sánchez-Béjar, José Juan, 2023. "Mobility restrictions and payment choices: The case of the Covid-19 pandemic," Journal of Behavioral and Experimental Finance, Elsevier, vol. 40(C).
    8. Liñares-Zegarra, José M. & Willesson, Magnus, 2021. "The effects of negative interest rates on cash usage: Evidence for EU countries," Economics Letters, Elsevier, vol. 198(C).
    9. Li, Jiayi & Luo, Sumei & Zhou, Guangyou, 2023. "Electronic payment, natural environment and household consumption: Evidence from China household finance survey," International Review of Financial Analysis, Elsevier, vol. 85(C).
    10. Gbalam Peter Eze & Dumani Markjackson, 2020. "Cashless Policy and Financial Inclusion in Nigeria," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 7(2), pages 201-207, February.
    11. Florencia Verónica Pedroni & Gabriela Pesce & Anahí Briozzo, 2022. "Inclusión financiera, medios de pago electrónicos y evasión tributaria: análisis económico y aplicación en Argentina," Apuntes del Cenes, Universidad Pedagógica y Tecnológica de Colombia, vol. 41(73), pages 171-202, February.

    More about this item

    Keywords

    Retail payments; Real economy; Financial development; Shadow economy; Financial crisis;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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