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Debit Card Incentives and Consumer Behavior: Evidence Using Natural Experiment Methods

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  • Nicholas Clerkin

    (Marquette University)

  • Andrew Hanson

    (University of Illinois at Chicago)

Abstract

We estimate the effects of a debit card incentive program on consumer behavior using bank-recorded transaction micro data and a natural experiment design. Using geographic and eligibility features of a generous pilot program offered by a Midwestern regional bank, we estimate both difference in difference and regression discontinuity models, allowing us to identify changes in debit and cash usage resulting from the program. Our primary results show that the program increases the number of debit transactions per customer by between 18.8 and 20.4%. We also estimate that cash usage declines, although these estimates are not statistically significant.

Suggested Citation

  • Nicholas Clerkin & Andrew Hanson, 2021. "Debit Card Incentives and Consumer Behavior: Evidence Using Natural Experiment Methods," Journal of Financial Services Research, Springer;Western Finance Association, vol. 60(2), pages 135-155, December.
    • Handle: RePEc:kap:jfsres:v:60:y:2021:i:2:d:10.1007_s10693-020-00342-9
    DOI: 10.1007/s10693-020-00342-9
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    References listed on IDEAS

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    3. Richard Wright & Erdal Tekin & Volkan Topalli & Chandler McClellan & Timothy Dickinson & Richard Rosenfeld, 2017. "Less Cash, Less Crime: Evidence from the Electronic Benefit Transfer Program," Journal of Law and Economics, University of Chicago Press, vol. 60(2), pages 361-383.
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    Cited by:

    1. Abedin, Mohammad Zoynul & Hajek, Petr & Sharif, Taimur & Satu, Md. Shahriare & Khan, Md. Imran, 2023. "Modelling bank customer behaviour using feature engineering and classification techniques," Research in International Business and Finance, Elsevier, vol. 65(C).

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