Essays in electronic money and banking
MetadataShow full item record
This dissertation, consisting of two essays, looks into electronic money and electronic banking from two related but different perspectives: the welfare and monetary policy study of electronic money in micropayment systems from a monetary economics perspective, and people’s acceptance of electronic banking services based on empirical studies from an econometrics perspective. The first essay establishes a theoretical monetary economics framework to introduce a new type of private electronic money, issued by producers to finance investment and redeemable in a basket of final goods. It describes a simple Internet economy with two types of private electronic currencies (one local and the other global). Both monies display transactional advantages in the micropayment systems and dominate fiat money in rate of return. The two electronic currencies and fiat money circulate in equilibrium. The local electronic currency can be sold with a premium or with a discount, depending on several factors including the probability of relocation faced by the agents in this economy. A higher probability of relocation increases this discount and reduces the share of the local electronic currency in the creditors’ portfolio. This new form of electronic money poses new and interesting challenges for both lawmakers and policy makers on how a clearinghouse shall be designed and regulated within the financial and payments system. As for any new products, the successful introduction of electronic money, and more broadly, electronic banking services in general, depends critically on people’s acceptance. Using data from the Survey of Consumer Finances, with discrete choice models, I show that some consumer characteristics, including age, gender, marriage status, race, education and income, do have significant effects on people’s likelihood of using electronic banking services, while employment status and financial assets tend to have more subtle and not so significant effects. One key finding is that although e-banking customers more or less have some common characteristics, they differ across different types of electronic banking services. This finding indicates the importance of a “transaction-based” marketing strategy and a well-maintained business information system to identify the potential market based on consumer characteristics.