Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/265968 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 9933
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Do digital payment technologies generate liquidity premia like cash and Treasury? We provide an estimate in the context of the world's largest digital payment platform, Alipay. Our empirical strategy exploits the variation in the timing of the introduction of money market funds that users on this platform can hold and use for digital transactions. We find that, once a fund becomes eligible for these transactions, its size increases by 45 times on average. Through the lens of an equilibrium demand system that models funds as imperfect substitutes, this size increase maps to a liquidity premium of about 0.8% per annum.
Subjects: 
digital payment
liquidity premium
money market fund
JEL: 
E41
G12
Document Type: 
Working Paper
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