Negative interest rates affect cash holding behavior
Economic literature and empirical evidence consistently indicate that negative interest rates influence cash holding behavior, often driving an increased demand for cash as a medium of wealth storage.
The retrieved literature contains direct empirical evidence (e.g., EU country data) and theoretical economic analyses establishing that negative interest rates alter cash usage and holding behavior. Papers [2], [4], and [5] specifically support the claim, while the remaining papers are either tangential or examine unrelated topics.
José M. Liñares‐Zegarra, Magnus Willesson. The effects of negative interest rates on cash usage: Evidence for EU countries. 2020. https://doi.org/10.1016/j.econlet.2020.109674
Using empirical difference-in-differences analysis across EU countries, this study demonstrates that negative interest rates lead to an observable increase in cash usage.
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David Humphrey. Negative interest rates and the demand for cash. 2016. https://doi.org/10.69554/ekuq3510
This study discusses how negative interest rates imposed by central banks create incentives for depositors and banks to increase their demand for and holding of physical cash.
Aleksander Berentsen, Hugo van Buggenum, Romina Ruprecht. On the Negatives of Negative Interest Rates. 2023. https://doi.org/10.17016/feds.2023.064
The research models long-run macroeconomic effects of negative interest rates and notes that the availability of cash plays a key role in driving asymmetric behavioral and policy responses.
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