Effects of bank branch/ATM consolidations on cash demand: Evidence from bank account transaction data in Japan

Abstract

This study considers the retrogression event of convenience for bank users as a natural experiment and analyzes the effect of this event on cash demand. Using bank account transaction data, we find that branch/ATM consolidations reduce the amount of cash withdrawals by past users considerably. Particularly, older or less wealthy users were severely affected by the discontinuation of branches. However, we find that branch/ATM consolidations reduce the total expenditure and inflows that include non-cash transactions almost by the same amount, which implies that the retrogression in convenience possibly caused users to shift to other banks for their daily payments. We also document facts about cash withdrawals from ATMs using bank account transaction data.