DIFFERENCES BETWEEN THE PERSONAL DEMAND FOR MONEY AND THE BUSINESS DEMAND FOR MONEY,
Abstract
The theoretical framework concerning the differences between the personal and the business demand for money is developed. Four standard hypotheses are introduced and the theory is restated in terms of demand deposits and debits to demand deposits. Some of the implications of the economic theory are mentioned, and a problem of data collection is discussed. Estimates of business turnover and personal turnover are obtained for banks in the Seventh Federal Reserve District where business turnover was found to be significantly greater than personal turnover. An analysis of data which the Federal Reserve Bank of Chicago collected from a bank in Kankakee, Illinois is presented. The main conclusions of the analysis are (1) that the synchronization of debits and credits in the business sector is superior to synchronization in the personal sector; (2) that the person is more uncertain about his average transactions over a period of time than is the business firm; (3) that because of (1) and (2) business turnover is greater than personal turnover; and (4) that while personal debits and personal deposits are unrelated, there is a significant positive relation between business debits and business deposits, i.e., business turnover is more stable than personal turnover.
Document Details
- Document Type
- Technical Report
- Publication Date
- Feb 08, 1960
- Accession Number
- AD0616560
Entities
People
- John J. Mccall
Organizations
- RAND Corporation