IDEAS home Printed from https://ideas.repec.org/a/eee/japwor/v71y2024ics0922142524000318.html
   My bibliography  Save this article

The rise of internet-only banks: Analyzing the bias in cross-prefectural money demand elasticity

Author

Listed:
  • Fujiki, Hiroshi

Abstract

In 2021, new bank forms, such as Internet-only banks, amassed 2 % of Japanese deposits. Tokyo’s statistics since 2005 encompass deposits in such banks, regardless of depositor location. These Tokyo-based banks operate branchless. Elevated deposits reported in Tokyo, Japan’s highest-income prefecture, could skew the income elasticity of money demand upwards in a cross-sectional regression. This study proposes reallocating Tokyo’s bank deposits to all prefectures to quantify the bias. Additionally, it suggests aggregating fifteen prefectures into five areas to address discrepancies between the deposit and income locations owing to cross-prefectural commuting. Adjusting for new bank deposits, the income elasticity of money demand decreased from 0.899 to 0.872 in March 2021, with overestimation increasing since March 2005. These findings suggest the adequacy of regional statistics in reflecting economic behavior in the digital era, warranting reevaluation.

Suggested Citation

  • Fujiki, Hiroshi, 2024. "The rise of internet-only banks: Analyzing the bias in cross-prefectural money demand elasticity," Japan and the World Economy, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:japwor:v:71:y:2024:i:c:s0922142524000318
    DOI: 10.1016/j.japwor.2024.101268
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0922142524000318
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.japwor.2024.101268?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Internet-only banks; income elasticity of money demand; regional data; digitization; cross-sectional money demand;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

    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:eee:japwor:v:71:y:2024:i:c:s0922142524000318. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505557 .

    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.