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Bruno Karoubi
''Does crime influence the merchants' preference for cash? Evidence from France.''
( 2012, Vol. 32 No.4 )
This paper is an attempt to determine whether crime as an environmental factor has a significant impact on merchant preference for cash. I exploit a unique database from a representative sample of merchants and show that crime has a twofold impact on the merchant subjective preference for cash. I build an indicator composed of theft variables concerning primarily both consumers and merchants. I find that a merchant whose store is located in a department in which my indicator is high has Ceteris Paribus a lower than average preference for cash. I also find that a higher level of financial fraud increases it. The first effect is interpreted to be the result of a precaution motive (cash payment and storage involve risk of loss and theft), while the second results from adverse selection (cash payments make tax evasion easier).
Keywords: Payment Instruments, Crime
Manuscript Received : Sep 05 2012 Manuscript Accepted : Dec 20 2012

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