TY - JOUR
T1 - The Need for Speed
T2 - Demand, Regulation, and Welfare on the Margin of Alternative Financial Services
AU - McDevitt, Ryan C.
AU - Sojourner, Aaron
N1 - Publisher Copyright:
© 2023 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.
PY - 2025/9
Y1 - 2025/9
N2 - 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.
AB - 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.
UR - https://www.scopus.com/pages/publications/105017841770
U2 - 10.1162/rest_a_01308
DO - 10.1162/rest_a_01308
M3 - Article
AN - SCOPUS:105017841770
SN - 0034-6535
VL - 107
SP - 1439
EP - 1447
JO - Review of Economics and Statistics
JF - Review of Economics and Statistics
IS - 5
ER -