David Bounie

Cash, Check or Bank Card? The Effects of Transaction Characteristics on the Use of Payment Instruments

Exploiting a unique and original dataset of 11,945 payments made from March to May 2005, the paper estimates the determinants of the probability of a transaction being paid by cash, check or bank card at the point of sale. Controlling for individual characteristics, the main results of the paper are: 1) a differentiated effect of the transaction size regarding payment instruments; 2) a specialization effect between payment instruments according to the type of good and spending place; 3) a double supply-side effect due to a restriction of the payment choice and to the organization of the payment process. For the first time ever, detailed data on consumption and payment patterns make it possible to assess the role of transaction characteristics in the use of payment instruments.

Pirates or Explorers? Analysis of Music Consumption in French Graduate Schools

A release device is actuated to release a workpiece by operation of either of two elongated shape memory metal alloy (SMMA) members. Each SMMA member has on one end a feature that engages a fitting on the workpiece, while its other end is mounted to a housing. A heater on each SMMA member raises its temperature to a transition temperature at which it returns to an unstressed (e.g. shorter) length, thereby releasing the workpiece. The two SMMA elements may be disposed in opposite directions from the housing or may be coaxial or offset and disposed in the same direction.

Modeling the Share of Cash Payments in the Economy: An Application to France

Modeling the demand for cash and deposits is a primary concern for central banks. Within a wide range of academic contributions, payment choice models based on transaction sizes (TS models) have been promoted. However, TS models induce strong predictions about the use of payment instruments. In particular, all equal-sized transactions are supposed to be paid with the same payment instrument. We propose a simple alternative model based on cash holding (CH model) that allows equal-sized transactions to be paid for in cash or with other payment instruments. Using micro-level payment data from two representative samples of the French population in 2005 and 2011, we test how well each model replicates the observed shares of cash payments in the French economy for each size of transaction. We find that the CH model outperforms TS models, as it better predicts the observed shares of cash payments with notably less demanding information on individuals.

Superstars and outsiders in online markets: An empirical analysis of electronic books

Recent rapid growth in electronic book sales has raised a critical question for publishers and bookstores: do e-books cannibalize or increase print sales? In this article, we compare the best-selling titles sold on www.Amazon.com in print or electronic Kindle formats during the period from November 2007 to July 2010. Using econometric methods, we find that the cannibalization of print sales by e-books is more likely to occur for superstar titles written by successful authors. However, we find that a new segment of successful electronic titles that are not best-selling in print format emerge; these books would probably have been unpopular without the new Kindle store and therefore this new distribution channel has expanded the market. We refer to these titles as digital outsiders. The latter are characterized not only by lower prices but also by older release dates. They also include titles that are only released in electronic format. We then argue that electronic books increase the market viability of old print releases. Finally we identify a category that we call print-preferred books that are top sellers in print but not as e-books for reasons of color, graphics, or the need to navigate non-linearly, a style to which the current generation of e-book readers are not well adapted.

Do Online Customer Reviews Matter? Evidence from the Video Game Industry

This paper analyzes the impact of online customer reviews on purchasing decisions and the influence of online customer or peer reviews compared to other channels of information such as offline press (expert reviews) and trial versions (personal reviews). Using 7,024 answers of an anonymous online survey administrated from June 18 to July 5, 2004, on one of the leading websites dedicated to video games in France, we show that i. online peer reviews gathered by consumers before purchasing video games positively influence purchasing decisions; ii. the effect of online peer reviews is as important as the effects of personal and expert reviews; iii. online customer reviews complement trial versions and expert reviews from magazines.

Cash Management and Payment Choices: A Simulation Model with International Comparisons

Despite various payment innovations, today, cash is still heavily used to pay for low-value purchases. This paper develops a simulation model to test whether standard implications of the theory on cash management and payment choices can explain the use of payment instruments by transaction size. In particular, using diary survey data from Canada, France, Germany and the Netherlands, we test the assumption that cash is still the most efficient payment instrument, and the idea that people hold cash for precautionary reasons when facing uncertainty about their future purchases. The results of the simulations show that these two factors are significant determinants of the high shares of low-value cash payments in Canada, France and Germany. Yet, they are not so crucial in the Netherlands, which exhibits a significant share of low-value card transactions. We discuss how the differences in payment markets across countries may explain the performance of the model.

Efficient Payments: How Much Do They Cost for the Central Bank?

Previous works related to optimal denominations for coins and banknotes consider that the “principle of least effort” that defines an efficient payment is the most important criterion for two main reasons. Firstly, it is more convenient for transactors and, secondly, it limits the production costs of denominations incurred by the central bank. Exploiting production cost data for the U.S. currency system in 2010, we show using simulations that efficient payments actually increase the annual production costs of the Federal Reserve by

How Do Internet Payments Challenge the Retail Payment Industry

156 million. As a consequence, we raise a larger issue for central banks which consists in issuing an efficient denominational mix that is more convenient for transactors and that reduces the production costs of denominations.

Is Baumol's 'square root law' still relevant? evidence from micro-level data

This valuable book discusses in detail, through a blend of theory and empirical research, the processes of innovation and the diffusion of new financial instruments.

The Demand for Currency Versus Debitable Accounts: A Reconsideration

The purpose of the article is to test, from micro-level data, the complete general framework of the transaction demand for money a la Baumol. Controlling for selection bias, we distinguish two populations who exclusively withdraw cash from either ATM or bank counter, from a sample of French representative individuals. The estimation results show the existence of large economies of scale as well as a positive effect of ATM surcharge and ATM and bank counter density on cash holding. Moreover, contrary to what might be expected, we do not find evidence of the impact of risk on cash holding.