Kim is a Senior Research Advisor. His research interests include industrial economics and applied econometrics.
Staff Analytical Notes
In 2015, the Bank of Canada surveyed merchants and found that cash was nearly universally accepted (Fung, Huynh and Kosse 2017). Since 2015, retail payments in Canada have become increasingly digitalized, as many Canadians have adopted digital payment innovations like contactless cards and Interac e-Transfer.
The results of our 2017 Bitcoin Omnibus Survey (December 12 to 15, 2017) when compared with those from 2016 show that Bitcoin “awareness” increased from 64 to 85 per cent, while ownership increased from 2.9 to 5.0 per cent. Most Bitcoin purchasers are using the cryptocurrency as an investment and not as a means of payment for goods or services.
Recent data show that the use of credit cards in Canada has been increasing, while the use of cash has been declining. At the same time, only two-thirds of small or medium-sized businesses accept credit cards.
Staff Discussion Papers
Consumer spending declined significantly during the recent COVID-19 pandemic. This negative shock likely reduced spending across all methods of payment (cash, debit, credit, etc.). The mix of payment methods consumers use could also be affected. We study how the pandemic has influenced the demand for and use of cash. We also offer insights into the use of other payment methods, such as debit and credit cards.
The Bank of Canada continues to use the Bitcoin Omnibus Survey (BTCOS) to monitor trends in Canadians’ awareness, ownership and use of Bitcoin. The most recent iteration was conducted in late 2018, following an 85 percent decline in the price of Bitcoin throughout the year.
Cash use is declining while contactless and mobile payments are on the rise.
As the sole issuer of bank notes, the Bank of Canada conducts methods-of-payment (MOP) surveys to obtain a detailed and representative snapshot of Canadian payment choices, with a focus on cash usage.
Staff Working Papers
Demand for Payment Services and Consumer Welfare: The Introduction of a Central Bank Digital CurrencyUsing a two-stage model, we study the determinants of Canadian consumers’ choices of payment method at the point of sale. We estimate consumer preferences and adoption costs for various combinations of payment methods. We analyze how introducing a central bank digital currency would affect the market equilibrium.
Explaining the Interplay Between Merchant Acceptance and Consumer Adoption in Two-Sided Markets for Payment MethodsRecent consumer and merchant surveys show a decrease in the use of cash at the point of sale. Increasingly, consumers and merchants have access to a growing array of payment innovations as substitutes for cash.
We propose a functional principal components method that accounts for stratified random sample weighting and time dependence in the observations to understand the evolution of distributions of monthly micro-level consumer prices for the United Kingdom (UK).
There has been tremendous discussion of Bitcoin, digital currencies and FinTech. However, there is limited empirical evidence of Bitcoin’s adoption and usage. We propose a methodology to collect a nationally representative sample using the Bitcoin Omnibus Survey (BTCOS) to track the ubiquity and usage of Bitcoin in Canada.
Cash is the preferred method of payment for small value transactions generally less than $25. We provide insight to this finding with a new theoretical model that characterizes and compares consumers’ costs of paying with cash to paying with cards for each transaction.
The discrete choice to adopt a financial innovation affects a household’s exposure to inflation and transactions costs. We model this adoption decision as being subject to an unobserved cost.
The use of payment cards, either debit or credit, is becoming more and more widespread in developed economies. Nevertheless, the use of cash remains significant.
We exploit the panel dimension of the Canadian Financial Monitor (CFM) data to estimate the impact of retail payment innovations on cash usage. We estimate a semiparametric panel data model that accounts for unobserved heterogeneity and allows for general forms of non-random attrition.
We measure consumers’ use of cash by harmonizing payment diary surveys from seven countries. The seven diary surveys were conducted in 2009 (Canada), 2010 (Australia), 2011 (Austria, France, Germany and the Netherlands), and 2012 (the United States).
A large body of empirical literature investigates differences in financing structures across firms. Private firms’ financing receives little attention due to the lack of data.
- “On the Evolution of UK Price Distributions”
(with Ba M. Chu, David T. Jacho-Chavez, and Oleksiy Kryvtsov), Annals of Applied Statistics, forthcoming.
- “Flexible Estimation of Demand Systems: A Copula Approach”
(with Gustavo Canavire-Bacarreza, David Jacho-Chavez, and Mateo Velasquez-Giraldo), Journal of Applied Econometrics, forthcoming.
- “Using Nonparametric Copulas to Measure Crude Oil Price Co-movements”
(with Anson Ho and David Jacho-Chavez), Energy Economics, forthcoming.
- “Debt Financing in Private and Public Firms”
(with Teodora Paligorova and Robert Petrunia), Annals of Finance, forthcoming.
- “Merchant Acceptance of Cash and Credit Cards at the Point of Sale”
(with Ben Fung, Kerry Nield, and Angelika Welte), Journal of Payment Systems and Strategy, vol. 12(2), pages 150-165.
- “Bitcoin Awareness and Usage in Canada”
(with Christopher S. Henry and Gradon Nicholls), Journal of Digital Banking, vol. 2(4), Spring 2018, pages 311-337.
- “Industry Shutdown Rates and Permanent Layoffs: Evidence from Firm-Worker Matched Data”
(with Yuri Ostrovsky, Robert Petrunia and Marcel Voia), IZA Journal of Labour Economics, vol. 6(1), Pages 1--31, December 2017.
- “Income and Democracy: A Smooth Varying Coefficient Redux“,
(with Alex Lundberg and David Jacho-Chavez), Journal of Applied Econometrics, vol. 32(3), Pages 719--724, April/May 2017.
- "Mixed Proportional Hazard Models with Continuous Finite Mixture Unobserved Heterogeneity",
(with Marcel Voia), Applied Stochastic Models in Business and Industry, Volume 33(1), Pages 81--94, January/February 2017.
- "Retail Payment Innovations and Cash Usage: Accounting for Attrition Using Refreshment Samples",
(with Heng Chen and Marie-Helene Felt) Journal of Royal Statistical Society Series A, vol. 180(2), Pages 503-530, February.
- "Consumer Cash Usage: A Cross-Country Comparison with Payment Diary Survey Data,"
(with John Bagnall, David Bounie, Anneke Kosse, Tobias Schmidt, Scott Schuh and Helmut Stix). International Journal of Central Banking, vol. 12(4), pages 1-61, December 2016.
- "Measuring Consumer Cash Holdings: Lessons from the 2013 Bank of Canada Methods-of-Payment Survey,"
(with Heng Chen, Christopher S. Henry, Rallye Shen and Kyle Vincent), Survey Practice, Volume 9 (3), 2016.
- "Flexible Estimation of Copulas: An Application to the US Housing Crisis,"
(with Anson Ho and David Jacho-Chavez), Journal of Applied Econometrics, Volume 31(1), April/May 2016, pages 603-610.
- "The Evolution of Firm-Level Distributions for Ukrainian Manufacturing Firms,"
(with David Jacho-Chavez, Oleksiy Kryvtsov, Oleksandr Shepotylo, and Volodymyr Vakhitov), Journal of Comparative Economics, Volume 44(1), pages 148-162, 2016.
- "Post-Entry Struggle for Life and Pre-Exit Shadow of Death from a Financial Perspective,"
(with Robert Petrunia), International Journal of the Economics of Business, Volume 23(1), February 2016, pages 1-18.
- "The Distributional Efficacy of Collaborative Learning on Student Outcomes,"
(with David Jacho-Chavez and James K. Self), The American Economist, Volume 60(2), September 2016, pages 98-119.
- "Subjective Health Expectations,"
(with Juergun Jung), Journal of Policy Modeling, Volume 37, Issue 4, July–August 2015, Pages 693-–711.
- "Consumer Payment Choice: Merchant Card Acceptance versus Pricing Incentives,"
(with Carlos Arango and Leonard Sabetti), Journal of Banking and Finance, Volume 55, June 2015, Pages 130-141.
- "A Nonparametric Analysis of Firm Size, Leverage and Labour Productivity Distribution Dynamics,"
(with David Jacho-Chavez, Robert Petrunia and Marcel Voia), Empirical Economics, Volume 48, Issue 1, pages 337-360. February 2015.
- "Retail Payments Innovation and the Demand for Cash in Canada,"
(with Ben S.C. Fung and Leonard Sabetti), Journal of Financial Market Infrastructures, Volume 3, Issue 1, pages 1-29, September 2014.
- "crs: A Package For Nonparametric Spline Estimation in R,"
(with Anson T.Y. Ho and David T. Jacho-Chavez) Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 29(2), pages 348-352, 2014.
- "Adaptive permutation tests for serial independence,"
(with Ba Chu, Chunfeng Huang, and Lanh Tran), Statistica Neerlandica, Vol. 68(3), pages 183-208, 08, 2014.
- “Fitness versus Fatness: Productivity, Financial Conditions, and the Survival of New Canadian Manufacturing Firms,”
(with Robert Petrunia and Marcel Voia). Structural Change and Economic Dynamics, 2012 vol. 23(4), pages 354-362.
- “Initial Financial Conditions, Unobserved Heterogeneity, and the Duration of New Firms,”
(with Robert Petrunia and Marcel Voia), Managerial Decision Economics, Volume 33 (2), pages 109–25, March 2012.
- “Functional Principal Component Analysis of Density Families with Categorical and Continuous Data on Canadian Entrant Manufacturing Firms,”
(with David T. Jacho-Chavez, Robert Petrunia and Marcel Voia) in Journal of the American Statistical Association, Volume 106 (495), pages 858–878, September 2011.
- “npRmpi: A package for Parallel Distributed Kernel Estimation in R,”
(with Ho, Anson and David T. Jacho-Chavez) in Journal of Applied Econometrics, Volume 26 (2), pages 344-349, March 2011.
- “Firm Size Distributions Through the Lens of Functional Principal Components Analysis,”
(with David T. Jacho-Chavez) in Journal of Applied Econometrics, Volume 25 (7), pages 1211-1214, November/December 2010.
- “The Impact of Initial Financial State on Firm Duration Across Entry Cohorts,”
(with Robert Petrunia and Marcel Voia) in Journal of Industrial Economics, Volume 58 (3), pages 661-689, September 2010.
- “The Efficacy of Collaborative Learning Recitation Sessions on Student Outcomes,”
(with David T. Jacho-Chavez and James K. Self) in American Economic Review Papers & Proceedings, vol. 100(2), pages 287-291, May 2010.
- “Age Effects, Financial Frictions and Firm Growth,”
(with Robert Petrunia) in Journal of Economic Dynamics and Control, Vol. 34 (5) pp. 1003-1013. May 2010.
- “Internally-Corrected Conditional Density Estimation: With An Application to Implied-Volatility,”
(with David T. Jacho–Chavez) in Journal of Quantitative Economics, Vol. 7, no. 2, pp. 20-40. 2009.
- “Growth and Governance: A Nonparametric Approach,”
(with David T. Jacho–Chavez) in Journal of Comparative Economics, Vol. 37 (1), p. 121–143, March 2009.
- “Entry penetration in Canadian Manufacturing,”
(with Robert Petrunia) in Economics Letters, Vol. 100 (1), Pages 87-90, July 2008.
- “Conditional density estimation: an application to the Ecuadorian manufacturing sector,”
(with David T. Jacho–Chavez) in Economics Bulletin Vol. 3 (62), pp. 1-6, 2007.
Chapters in books
- “Average derivative estimation with missing responses,”
(with Bravo, Francesco and David T. Jacho- Chavez) in Chapter 5, p. 131–156 of Advances in Econometrics: Missing Data, Volume 27A, 2011, edited by David Drukker. Emerald Group Publishing.
- “Nonlinear Difference-in-Difference Treatment Effect Estimation: A Distributional Analysis,”
(with David T. Jacho- Chavez and Marcel Voia) in Chapter 9, p. 251–272 of Advances in Econometrics: Missing Data Volume 27A, 2011, edited by David Drukker. Emerald Group Publishing.
- “A Nonparametric Quantile Analysis of Growth and Governance,”
(David T. Jacho- Chavez) in Chapter 6, p. 193–221 of Advances in Econometrics: Nonparametric Econometric Methods, Volume 25, 2009, edited by Jeffrey S. Racine and Qi Li. Emerald Group Publishing.
- "Estimating State-Price Densities with Nonparametric Regression"
(with Pierre Kervella and Jun Zheng) in Chapter 8, pages of Applied Quantitative Finance, 2002, edited by Wolfgang Haerdle, Torsten Kleinow, and Gerhard Stahl, Springer-Verlag.