My five pounds are not as good as yours, so I will spend them
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An experimental approach is used to examine how money denomination and the choice between or availability of coins and banknotes may influence consumers’ purchasing behaviour. Evidence shows that for small amounts of money, consumers may prefer a smaller monetary value in banknotes rather than a higher value in coins. Findings also suggest that people carrying coins are more likely to make a purchase of small value than people not carrying coins.
KeywordsField experiment Currency denomination Banknotes Coins
I am grateful to two anonymous referees and the Editor of the Journal for their constructive comments and helpful criticism. Thanks are also due to Irene Botosaru, Paul Dolan, Matteo Galizzi, Loukas Karabarbounis, George Kavetsos, Petros Milionis, Chris Muris, Pedro Santos Raposo, Marta Serra Garcia and Jan Stoop for comments and suggestions on earlier versions of the paper. I have also greatly benefitted from discussions with Georgina Blanco-Mancilla and Pedro Maia Gomes.
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