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Cash Use of the Taiwan Dollar: Is It Efficient? †

Author

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  • Philip Hans Franses

    (Econometric Institute, Erasmus School of Economics, P.O. Box 1738, NL3000 DR Rotterdam, The Netherlands
    As of June 2018, Honorary Chair Professor, Asia University, Taichung, Taiwan.)

  • Max Welz

    (Econometric Institute, Erasmus School of Economics, P.O. Box 1738, NL3000 DR Rotterdam, The Netherlands)

Abstract

Two banknotes and two coins of the New Taiwan Dollar are infrequently (if at all) used in Taiwan when people make cash payments. This note examines the effect of this behavior on the efficiency of cash payments. The results are compared with the Euro, where the two highest and two lowest tokens are also rarely used. We find for Taiwan that inefficiency increases with 60.7%, while for the Euro it is only 25.3%. The main reason is that two of the rarely used coins and notes in Taiwan are in the middle of the denominational range, whereas for the Euro, these tokens concern the ends of that range.

Suggested Citation

  • Philip Hans Franses & Max Welz, 2019. "Cash Use of the Taiwan Dollar: Is It Efficient? †," JRFM, MDPI, vol. 12(1), pages 1-6, January.
    • Handle: RePEc:gam:jjrfmx:v:12:y:2019:i:1:p:13-:d:197684
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    References listed on IDEAS

    as
    1. Carin van der Cruijsen & Lola Hernandez & Nicole Jonker, 2017. "In love with the debit card but still married to cash," Applied Economics, Taylor & Francis Journals, vol. 49(30), pages 2989-3004, June.
    2. Franses, Philip Hans & Kippers, Jeanine, 2007. "An empirical analysis of euro cash payments," European Economic Review, Elsevier, vol. 51(8), pages 1985-1997, November.
    3. Jeanine Kippers & Erjen van Nierop & Richard Paap & Philip Hans Franses, 2003. "An Empirical Study of Cash Payments," Statistica Neerlandica, Netherlands Society for Statistics and Operations Research, vol. 57(4), pages 484-508, November.
    4. Segendorf, Björn & Jansson, Thomas, 2012. "The Cost of Consumer Payments in Sweden," Working Paper Series 262, Sveriges Riksbank (Central Bank of Sweden).
    5. Philip Hans Franses & Jeanine Kippers, 2010. "How do we pay with euro notes when some notes are missing? Empirical evidence from Monopoly® experiments," Applied Financial Economics, Taylor & Francis Journals, vol. 20(6), pages 459-464.
    6. Carin van der Cruijsen & Lola Hernandez & Nicole Jonker, 2017. "In love with the debit card but still married to cash," Applied Economics, Taylor & Francis Journals, vol. 49(30), pages 2989-3004, June.
    7. Khan, Jashim & Belk, Russell W. & Craig-Lees, Margaret, 2015. "Measuring consumer perceptions of payment mode," Journal of Economic Psychology, Elsevier, vol. 47(C), pages 34-49.
    8. Cramer, J. S., 1983. "Currency by denomination," Economics Letters, Elsevier, vol. 12(3-4), pages 299-303.
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    Cited by:

    1. Chia-Lin Chang, 2020. "Editorial for Applied Econometrics," JRFM, MDPI, vol. 13(9), pages 1-5, August.

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    More about this item

    Keywords

    cash payments; efficiency; denomination range; ; E42; E58;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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