Digital Payments and Consumption: Evidence from the 2016 Demonetization in India

• 成果类型: Article
• 署名作者: Agarwal, Sumit; Ghosh, Pulak; Li, Jing; Ruan, Tianyue
• 署名单位: National University of Singapore; Indian Institute of Management (IIM System); Indian Institute of Management Bangalore; Singapore Management University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhae005
• 发表日期: 2024
• 页码: 2550
• 关键词: Mobile money; COSTS; benefits; CARD

摘要

We study how consumer spending responds to digital payments, using the differential switch to digital payments across consumers induced by the sudden 2016 Indian Demonetization for identification. Digital payment use rose by 2.94 percentage points and monthly spending increased by 2.38% for an additional 10 percentage points in prior cash dependence. Spending remained elevated even when cash availability recovered. Robustness analyses show that the spending response is not driven by purchase substitution, income shocks, credit supply, or price changes. We provide causal evidence that digital payments increase consumer spending due to subdued endowment effects.