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Digital Payment, Household Consumption Behavior, and Financial Literacy

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  • Anusorn Minphimai

Abstract

This study examines the impact of innovations in the payment system on household finance, focusing on consumption behaviors and financial literacy among low-income households. The investigation utilizes Thailand’s introduction of the cashless State Welfare Card to low-income households in 2017 as a quasi-experiment setting. The primary data sources for this study include the large-scale countrywide household socioeconomic survey (SES) conducted by Thailand’s National Statistical Office (NSO) and survey data from individuals in four provinces of Thailand. The empirical strategy in this study is primarily fuzzy regression discontinuity design. The results of the study reveal that individuals who receive the cashless State Welfare Card experience effective increases in consumption of the food and beverage items that are the target of the policy. Contrary to concerns about adverse impacts, such as overconsumption or using the card for unintended items like cigarettes, there is no evidence supporting these claims. Instead, people using the state welfare card exhibit better financial literacy and reduced risk-taking consumption behavior. The result underscores the importance of financial literacy training provided alongside the card. However, the study does not find sufficient evidence to suggest a significant impact on trust in the financial system.

Suggested Citation

  • Anusorn Minphimai, 2024. "Digital Payment, Household Consumption Behavior, and Financial Literacy," PIER Discussion Papers 219, Puey Ungphakorn Institute for Economic Research.
    • Handle: RePEc:pui:dpaper:219
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    File URL: https://www.pier.or.th/files/dp/pier_dp_219.pdf
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    References listed on IDEAS

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    1. Ethan Ligon & Badal Malick & Ketki Sheth & Carly Trachtman, 2019. "What explains low adoption of digital payment technologies? Evidence from small-scale merchants in Jaipur, India," PLOS ONE, Public Library of Science, vol. 14(7), pages 1-22, July.
    2. Gabriel Chodorow-Reich & Gita Gopinath & Prachi Mishra & Abhinav Narayanan, 2020. "Cash and the Economy: Evidence from India’s Demonetization," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(1), pages 57-103.
    3. Amstad, Marlene & Huang, Bihong & Morgan, Peter J. & Shirai, Sayuri (ed.), 2019. "Central Bank Digital Currency and Fintech in Asia," ADBI Books, Asian Development Bank Institute, number 8, Décembre.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Household Finance; Financial Technology; State Welfare Card; Fuzzy Regression Discontinuity Design;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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