Economics of Payments XII Conference, October 26, 2023

TL;DR

Bank branch closures due to robberies in Brazil led to an increase in the adoption of digital payment technologies and a decrease in cash usage.

Transcript

the Federal Reserve System works every day to support a growing and stable us economy across the United States the Federal Reserve through its Federal Reserve education program also helps people understand how the economy works so consumers have the tools to make sound financial decisions through this education program teachers have access to class... Read More

Key Insights

• 🥺 Bank branch closures due to robberies in Brazil led to a decrease in cash availability and an increase in the adoption and usage of the digital payment technology called PIX.
• 🏦 The effects of bank branch closures spilled over to unaffected banks, particularly digital institutions, leading to increased adoption of PIX and provision of credit.
• ✋ The adoption of PIX was higher in areas with higher GDP per capita, literacy rates, share of the service sector, and internet access.
• ❓ The adoption of PIX and the decrease in cash usage highlight the potential benefits of digital payment technologies in promoting financial inclusion and reducing reliance on cash.

Questions & Answers

Q: How did bank branch closures affect the adoption of digital payment technology PIX?

Bank branch closures due to robberies in Brazil led to a decrease in cash availability and an increase in the adoption and usage of PIX as an alternative payment method.

Q: Did the effects of bank branch closures extend to other banks in the market?

Yes, the effects of bank branch closures spilled over to unaffected banks, particularly digital institutions, leading to increased adoption of PIX and provision of credit.

Q: What factors influenced the adoption of PIX in Brazil?

The adoption of PIX was higher in areas with higher GDP per capita, literacy rates, share of the service sector, and internet access, indicating the importance of infrastructure and financial literacy in the adoption of digital payment technologies.

Q: Did the closures of bank branches lead to a decrease in cash usage?

Yes, the study found that bank branch closures due to robberies reduced cash availability, leading to a decrease in cash usage by individuals and businesses.

Q: What were the effects of PIX adoption on credit provision by digital institutions?

PIX adoption was associated with an increase in credit provision by digital institutions, particularly for corporate clients, indicating the positive impact of digital payment technologies on financial inclusion and competition in the credit market.

Summary & Key Takeaways

• The study focuses on the impact of bank branch closures due to robberies in Brazil on payment technologies and cash usage.

• Bank branch closures led to a reduction in cash inventory and an increase in the adoption and usage of the new payment technology called PIX.

• The effects of bank branch closures and the adoption of PIX spilled over to unaffected banks, particularly digital institutions, leading to increased provision of credit.