Dirty Money: Does the Risk of Infectious Disease Lower Demand for Cash?
IMF Working Papers, November 20, 2020
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- Dirty Money: Does the Risk of Infectious Disease Lower Demand for Cash?
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Bibliographic details
- Authors: Serhan Cevik
- Published: November 20, 2020
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513560892.001
Research question and context
- Investigates whether the risk of infectious diseases affects demand for physical cash.
- Motivated by the coronavirus pandemic and apprehension about handling potentially contaminated cash.
- First empirical attempt in the literature to address this question.
Data and methodology
- Uses two-stage least squares (2SLS) methodology with instrumental variable (IV) to address omitted variable bias and account for potential endogeneity.
- Controls for macroeconomic, financial, and technological factors.
Key findings
- The analysis indicates that the spread of infectious diseases lowers demand for physical cash, after controlling for macroeconomic, financial, and technological factors.
- Transactional constraints imposed by the COVID-19 pandemic could become a catalyst for the use of digital technologies around the world.
- Electronic payment methods may not be universally available in every country owing to financial and technological bottlenecks.
Subject areas and keywords
- Subject: Communicable diseases, COVID-19, Currencies, Deposit rates, Ebola, Financial services, Health, Money
- Keywords: cash transfer; cash use; Communicable diseases; coronavirus pandemic; COVID-19; Currencies; currency-in-circulation; Demand for cash; Deposit rates; digital money; Ebola; Global; handling cash; infectious diseases; infectious-disease outbreak; payment method; store of value; WP
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- Working Paper