Title

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

Upjohn Author ORCID Identifier

https://orcid.org/0000-0001-6839-2512

Publication Date

5-11-2023

Source

The Review of Economics and Statistics: 1–25

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.

DOI

10.1162/rest_a_01308

Publisher

The MIT Press

Subject Areas

Urban issues

Share

COinS
 

Citation

McDevitt, Ryan C. and Aaron Sojourner. 2023. "The Need for Speed: Demand, Regulation, and Welfare on the Margin of Alternative Financial Services." The Review of Economics and Statistics: 1–25. https://doi.org/10.1162/rest_a_01308