Drivers of Credit and Debit Card Transactions
61 Pages Posted: 30 Apr 2024
Date Written: September 21, 2024
Abstract
Based on the implications of an economic model, this paper investigates the macroeconomic drivers of credit and debit card transactions consisting of purchases and cash withdrawals, where the contributions of economic activity, unemployment, inflation, and policy (interest) rates are evaluated. The investigation is based on a unique data set covering the overall credit and debit transactions of a country, Türkiye, where the number of transactions and the amount per transaction are considered. The formal estimations to evaluate the model-implied macroeconomic drivers of credit and debit card transactions are conducted by using structural vector autoregression models for the monthly sample covering the period between 2015m1 and 2023m12. The estimation results mainly suggest that (i) shocks to the economic activity increase the number of transactions for both credit and debit cards, whereas they increase the amount per transaction mostly for purchases with credit cards, (ii) unemployment shocks reduce the number of transactions mostly for purchases, while they reduce the amount per transaction mostly for credit cards, (iii) inflation shocks increase the number of transactions as well as the amount per transaction for both credit and debit cards, (iv) shocks to policy rates increase the number of transactions, while they mostly reduce the amount per transaction, suggesting that monetary policy is effective through the amount per transaction rather than the number of transactions, (v) shocks to the economic activity explain most of the volatility in the number of transactions for both credit and debit cards, and (vi) inflation shocks explain most of the volatility in the amount per transaction for both credit and debit cards.
Keywords: Credit Cards, Debit Cards, Purchases, Cash Withdrawals, Macroeconomic Drivers
JEL Classification: C32, E51, E52
Suggested Citation: Suggested Citation