Why Does Cash Still Exist?

Abstract: With non-cash transactions on the rise and the debate about the future cashless society is raging, cash is still being used around the world with varying degrees. This thesis studies the behavioral determinants of consumers with regard to cash usage. The current research have found several determinants of consumer behavior and this study aims at combining the existing knowledge into one model that might explain peoples’ payment medium behaviors. The method chosen in this thesis was to do a factor analysis in order to validate the hypothesized model. The obtained data-set was analyzed by using IBM SPSS Statistics, version 24.0.0.0. To start with the data was deemed to be suitable after checking the adequacy of our data set through a KMO and Bartlett’s test and further by looking at the MSA table where the variables score quite high indicating that the data is suitable. Secondly the results from the factor analysis indicated that there are eight components extracted with some components being uncorrelated but the majority of extracted components from the output being correlated. Finally we found that our theoretical model holds but we recommend further research to be conducted on how locations determine cash usage. Moreover, we noted that some components into the socio-demographic groups are uncorrelated and thus we would like to recommend further research into the statistical validity of the model.