This study investigates how retail payment methods affect aggregate macroeconomic activity. By tracing the relative norms and practices of paper-based payment instruments (checks) and electronic payment methods (payment cards, credit transfers and direct debits) in 27 European Union member countries, the paper reports that a higher penetration ratio of electronic payment methods is generally associated with greater GDP, trade, consumption and tax revenue. The 2008 financial crisis and a country’s shadow economy level have an incremental impact on the relationship between payment methods and economy. The study also finds substitution effects between paper-based and electronic payment methods and complementary effects across electronic payment methods. The findings are robust after controlling for endogeneity. Our study supports policies promoting further repositioning and transfer to efficient electronic payment instruments.

Theoretical and empirical evidence have long acknowledged that children affect the financial decisions of their parents. However, the literature is limited to the study of the impact of dependent children. This study examines the impact of both dependent and independent children on key financial decisions of Chinese parents using data on over 20,000 individuals from the 2016 Wave of the China Family Panel Studies (CFPS). We demonstrate how number, gender, and age of children could influence parents’ financial decisions differently through the various stages of their parenthood. Our findings highlight the strong and persistent saving for children motive in Chinese households.