The Determinants of Consumer Cash Usage in Turkey

The Determinants of Consumer Cash Usage in Turkey

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English

December 2021

This paper investigates the determinants of consumer cash usage in daily transactions in Turkey using a probit model. In doing so, we use the results of the Methods of Payment Survey conducted by the Central Bank of the Republic of Turkey in 2020. The survey results indicate that cash is still the most common form of payment in Turkey, despite recent technological innovations in payment systems. The results show that the likelihood of cash usage increases for the amounts that match currency denominations and convenient prices, while it decreases for the amounts for which the consumer receives a coin change. Also, the likelihood of cash usage decreases with education and income level and increases with age and being a paid employee. As for the transaction characteristics, we find that the likelihood of cash usage decreases with an increase in transaction size and that cash is more frequently used for low-value transactions. It is also worth noting that having greater cash balances at the beginning of the day increases the probability of using cash for all transaction amounts.

Cash; Payment behavior; Convenient prices; Probit model