Determinants of Household Check Writing

The Impacts of the Use of Electronic Banking Services and Alternative Pricing of Services

Abstract

In recent years, there has been a simultaneous deregulation of interest ceilings on household deposits and a dramatic deployment of automatic teller machines (ATM) by the banking industry. At one time, there was a belief that the U.S. would evolve into a “checkless society” because of the development of electronic funds transfer systems such as the ATM. That has clearly not happened. The purpose of this paper is to estimate the impacts of both the use of A TM and the change in pricing due to deregulation on household check writing. The source of the data is a survey of households conducted by the Board of Governors of the Federal Reserve System. The results of the tests indicate that use of electronic banking services had no discernible impact on check writing while different methods of pricing checking account services did have a substantial impact on check writing.