Cash in the Darkness

Abstract

Relying on a large dataset on cash withdrawals of over 165 million bank cards from China, we find that a higher ratio of cash withdrawals occurring late at night is associated with more criminal activities. The effect is stronger for crimes that are more involved in nighttime cash transactions but is muted for cash withdrawals occurring during the day or for civil disputes and non-nighttime-cash-intensive criminal cases. When testing the temporal sequence between nighttime cash withdrawals and criminal events, we find that nighttime cash withdrawals on average lag behind crime events by one day. Moreover, the proportion of cash withdrawals at night significantly decreases during exogenous anti-crime events but increases after the ban of cryptocurrencies. Overall, our study suggests that the use of cash at night plays an important role in fueling criminal activities.

Keywords: Crimes, The Use of Cash, Payment Methods

JEL Classification: D12, E41, G50, K40