The Importance of Financial Literacy in Determining Cash Use

In conjunction with the UK’s National Westminster bank, Prof Darren Duxbury, behavioural finance expert and Chair in Finance at Newcastle University Business School, has carried out a research project investigating the behavioural traits that influence peoples’ choices of payment method¹.

The survey examined the participants’ intentions to use cash compared to non-cash forms of payment (ie. electronic methods, including both debit and credit cards), focusing on the factors influencing the choice between cash and electronic payments.

The study investigated behavioural traits measured independently of the payment decision. It also considered how exogenous shocks, such as security breaches and financial crises, influenced payment intentions.

Findings

People who were particularly concerned about losing money tended to use electronic payments more. Those less concerned were happy to use cash.