Demand for Cash: Econometric Models for India

This thesis deals with examining the determinants of the demand for cash (paper currency) in India. First, we study determinants of the demand for cash at the national level. Factors associated with the demonetization policy event significantly vary with cash demand. Second, I analyzed primary data on individual preferences for cash. I find that ease of accessing cash, favourable attitudes toward cash usage, and behavioural factors are all important for cash use. Last, I study the longevity of paper banknotes. Smaller-value banknotes last for an average of 4-5 years, and their life is determined by how frequently they are used.