View in EDS

The Need for Speed: Demand, Regulation, and Welfare on the Margin of Alternative Financial Services

Saved in:

Bibliographic Details
Title:	The Need for Speed: Demand, Regulation, and Welfare on the Margin of Alternative Financial Services
Authors:	McDevitt, Ryan C., Sojourner, Aaron
Source:	Review of Economics and Statistics. 107:1439-1447
Publisher Information:	MIT Press, 2025.
Publication Year:	2025
Subject Terms:	Urban issues, check cashing, Economics, Labor Economics, 1. No poverty, alternative financial services, financial regulation, Social and Behavioral Sciences
Description:	We use a nonlinear reduction in a bank’s check-cashing fees and variation in regulated check-clearing times to identify the elasticity of demand for cashing checks rather than depositing them. We find that an extra day of check-clearing time makes account holders 65.5% more likely to cash a check than deposit it, which implies they are willing to pay $11.17 per day for faster access to their funds—an effective annualized discount rate of 11,054% for the average check. We use this elasticity to evaluate recent proposals that mandate faster check-clearing times.
Document Type:	Article
Language:	English
ISSN:	1530-9142 0034-6535
DOI:	10.1162/rest_a_01308
Accession Number:	edsair.doi.dedup.....188d6ec18198d1b2cfa5cc8d8247f7d9
Database:	OpenAIRE

Description
Abstract:	We use a nonlinear reduction in a bank’s check-cashing fees and variation in regulated check-clearing times to identify the elasticity of demand for cashing checks rather than depositing them. We find that an extra day of check-clearing time makes account holders 65.5% more likely to cash a check than deposit it, which implies they are willing to pay $11.17 per day for faster access to their funds—an effective annualized discount rate of 11,054% for the average check. We use this elasticity to evaluate recent proposals that mandate faster check-clearing times.
ISSN:	15309142 00346535
DOI:	10.1162/rest_a_01308