IDEAS home Printed from https://ideas.repec.org/p/bca/bocawp/22-26.html
   My bibliography  Save this paper

Cash in the Pocket, Cash in the Cloud: Cash Holdings of Bitcoin Owners

Author

Listed:
  • Daniela Balutel
  • Christopher Henry
  • Kim Huynh
  • Marcel Voia

Abstract

We estimate the effect of Bitcoin ownership on the level of cash holdings of Canadian consumers. Bitcoin ownership positively correlates with cash holdings even after accounting for selection into ownership via a control function approach. On average, Bitcoin owners hold 83 percent (in 2018) to 95 percent (in 2017) more cash than non-owners. Focusing on the quantiles of cash holdings, we find that Bitcoin ownership has a highly nonlinear effect. For example, the difference in cash holdings between Bitcoin owners and non-owners in 2017 varies from 63 percent at the 25th quantile of cash to 176 percent at the 95th quantile of cash. Our results provide some evidence to reject the hypothesis that new digital currencies or technologies, such as Bitcoin, will lead to a decline in cash holdings.

Suggested Citation

  • Daniela Balutel & Christopher Henry & Kim Huynh & Marcel Voia, 2022. "Cash in the Pocket, Cash in the Cloud: Cash Holdings of Bitcoin Owners," Staff Working Papers 22-26, Bank of Canada.
    • Handle: RePEc:bca:bocawp:22-26
    as

    Download full text from publisher

    File URL: https://www.bankofcanada.ca/wp-content/uploads/2022/06/swp2022-26.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dong, Yingying, 2010. "Endogenous regressor binary choice models without instruments, with an application to migration," Economics Letters, Elsevier, vol. 107(1), pages 33-35, April.
    2. Patrick Royston & Douglas G. Altman, 1994. "Regression Using Fractional Polynomials of Continuous Covariates: Parsimonious Parametric Modelling," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 43(3), pages 429-453, September.
    3. Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
    4. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267.
    5. Fujiki, Hiroshi, 2020. "Who adopts crypto assets in Japan? Evidence from the 2019 financial literacy survey," Journal of the Japanese and International Economies, Elsevier, vol. 58(C).
    6. Kim Huynh & Jozsef Molnar & Oleksandr Shcherbakov & Qinghui Yu, 2020. "Demand for Payment Services and Consumer Welfare: The Introduction of a Central Bank Digital Currency," Staff Working Papers 20-7, Bank of Canada.
    7. Daniela Balutel & Walter Engert & Christopher Henry & Kim Huynh & Marcel Voia, 2022. "Private Digital Cryptoassets as Investment? Bitcoin Ownership and Use in Canada, 2016-2021," Staff Working Papers 22-44, Bank of Canada.
    8. Jeffrey M. Wooldridge, 2015. "Control Function Methods in Applied Econometrics," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 420-445.
    9. Christopher Henry & Kim Huynh & Gradon Nicholls & Mitchell Nicholson, 2019. "2018 Bitcoin Omnibus Survey: Awareness and Usage," Discussion Papers 2019-10, Bank of Canada.
    10. Walter Engert & Ben Fung & Björn Segendorf, 2019. "A Tale of Two Countries: Cash Demand in Canada and Sweden," Discussion Papers 2019-7, Bank of Canada.
    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. Daniela Balutel & Christopher Henry & Jorge Vásquez & Marcel Voia, 2022. "Bitcoin adoption and beliefs in Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(4), pages 1729-1761, November.

    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. Daniela Balutel & Christopher Henry & Jorge Vásquez & Marcel Voia, 2022. "Bitcoin adoption and beliefs in Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(4), pages 1729-1761, November.
    2. Daniela Balutel & Walter Engert & Christopher Henry & Kim Huynh & Marcel Voia, 2022. "Private Digital Cryptoassets as Investment? Bitcoin Ownership and Use in Canada, 2016-2021," Staff Working Papers 22-44, Bank of Canada.
    3. Fujiki, Hiroshi, 2020. "Who adopts crypto assets in Japan? Evidence from the 2019 financial literacy survey," Journal of the Japanese and International Economies, Elsevier, vol. 58(C).
    4. Hiroshi Fujiki, 2023. "Attributes needed for Japan’s central bank digital currency," The Japanese Economic Review, Springer, vol. 74(1), pages 117-175, January.
    5. Helmut Stix, 2021. "Ownership and purchase intention of crypto-assets: survey results," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(1), pages 65-99, February.
    6. Svetlana Abramova & Rainer Böhme & Helmut Elsinger & Helmut Stix & Martin Summer, 2022. "What can CBDC designers learn from asking potential users? Results from a survey of Austrian residents (Svetlana Abramova, Rainer Böhme, Helmut Elsinger, Helmut Stix, Martin Summer)," Working Papers 241, Oesterreichische Nationalbank (Austrian Central Bank).
    7. Awaworyi Churchill, Sefa & Koomson, Isaac & Munyanyi, Musharavati Ephraim, 2023. "Transport poverty and obesity: The mediating roles of social capital and physical activity," Transport Policy, Elsevier, vol. 130(C), pages 155-166.
    8. Trinh Quang Long & Peter J. Morgan & Naoyuki Yoshino, 2023. "Financial literacy, behavioral traits, and ePayment adoption and usage in Japan," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-30, December.
    9. Hao Dong & Daniel L. Millimet, 2020. "Propensity Score Weighting with Mismeasured Covariates: An Application to Two Financial Literacy Interventions," JRFM, MDPI, vol. 13(11), pages 1-24, November.
    10. Maxime Menuet & Patrick Villieu & Marcel Voia, 2021. "Does public debt secure social peace? A diversionary theory of public debt management," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(3), pages 475-501, October.
    11. Daniela Balutel & Walter Engert & Christopher S. Henry & Kim P. Huynh & Marcel Voia, 2024. "Explaining bitcoin ownership in Canada: Trends from 2016 to 2021," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 57(3), pages 777-798, August.
    12. Samuele Centorrino & María Pérez‐Urdiales & Boris Bravo‐Ureta & Alan Wall, 2024. "Binary endogenous treatment in stochastic frontier models with an application to soil conservation in El Salvador," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 39(3), pages 365-382, April.
    13. Nathan Delacrétaz & Bruno Lanz & Jeremy van Dijk, 2020. "The chicken or the egg: Technology adoption and network infrastructure in the market for electric vehicles," IRENE Working Papers 20-08, IRENE Institute of Economic Research.
    14. Ahn, Soojung & Steinbach, Sandro, 2022. "COVID-19 Trade Actions and Their Impact on the Agricultural and Food Sector," 2023 Allied Social Sciences Association (ASSA) Annual Meeting, January 6-8, 2023, New Orleans, Louisiana 316789, Agricultural and Applied Economics Association.
    15. Kim Huynh & Gradon Nicholls & Mitchell Nicholson, 2020. "2019 Cash Alternative Survey Results," Discussion Papers 2020-8, Bank of Canada.
    16. Mario Arias-Oliva & Jorge de Andrés-Sánchez & Jorge Pelegrín-Borondo, 2021. "Fuzzy Set Qualitative Comparative Analysis of Factors Influencing the Use of Cryptocurrencies in Spanish Households," Mathematics, MDPI, vol. 9(4), pages 1-19, February.
    17. Cornelissen, Thomas & Dustmann, Christian & Raute, Anna & Schönberg, Uta, 2016. "From LATE to MTE: Alternative methods for the evaluation of policy interventions," Labour Economics, Elsevier, vol. 41(C), pages 47-60.
    18. Pallab Ghosh & Kevin Grier & Jaeho Kim, 2021. "Heterogeneous endogeneity," Statistical Papers, Springer, vol. 62(2), pages 847-886, April.
    19. Gregory L. Rosston & Scott J. Savage & Bradley S. Wimmer, 2018. "Price competition in the market for business telecommunications services," Journal of Regulatory Economics, Springer, vol. 54(1), pages 81-104, August.
    20. Daniela Balutel & Marie-Hélène Felt & Gradon Nicholls & Marcel-Cristian Voia, 2024. "Bitcoin awareness, ownership and use: 2016–20," Applied Economics, Taylor & Francis Journals, vol. 56(1), pages 33-58, January.

    More about this item

    Keywords

    Bank notes; Digital currencies and fintech; Econometric and statistical methods;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:bca:bocawp:22-26. 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/bocgvca.html .

    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.