Return to Previous Page

Cashless Economy for Developing Countries: A Case in Indian Context*

CASE STUDY, MANAGERIAL ECONOMICS
ET Cases - FLAME, 9 Pages
AUTHOR(S) : Dr.Abhay Kumar, Assistant Professor, Varun Dua, Partha Sharma, Shailin Jain, Pratha Garg - Students, NMIMS University

Case Preview

Cashless Economy for Developing Countries: A Case in Indian Context

 

Cashless is a very ambiguous word. It can have two different meanings. One cash-free and the other, less cash. The interpretation of this word in these varied forms has a magnanimous impact when looked over at a national scale. Cash-free economy is not something that is possible. Cash forms one of the most widely used medium of payment. There are tasks where a cash-based payment is much simpler and easier than a mobile wallet or card-based payment. Activities like tipping the restaurant waiter or giving money to a beggar would be troublesome in a cash-free environment. Cash simply acts like a lubricator in our economy. Therefore, in our case study we shall consider the latter meaning for cashless. Developed countries in Europe and North America have already taken drastic measures to move towards a cashless society. Stores and transportation facilities in Sweden and Denmark have already stopped accepting cash. The developed countries have been able to bring out these massive economic changes because they have the necessary resources and support from their citizens. There is no doubt that going cashless has its own set of advantages and disadvantages, but is it the right time for the developing countries to move towards a cashless society? Recent events like demonetization in India and promotion of fin-tech services have stirred minds of people into thinking about cashless society in developing countries. Through this case we shall try to understand whether moving towards a cashless society will be beneficial for countries like India or not..............

Exhibits

Exhibit I: A Comparative Study on the Use of Cash by India, Brazil and South Korea

Exhibit II: Comparative Analysis of Using Cash vis-à-vis Cards

Exhibit III: Cost of using Cash to various stakeholders

Exhibit IV: Mode of Saving in India

Exhibit V: Banking Access to Indian Citizen

Exhibit VI: Supply of Narrow and Broad Money from 2000-01 to 2016-17

Exhibit VII: Outstanding Balance of M1 and M3 as on March 31st

Teaching Note Preview

Cashless Economy for Developing Countries: A Case in Indian Context

 

Synopsis

In November 2016, the government of India took initiative towards cashless economy by demonetizing old currencies and promoting fin-tech companies. This case study discusses the impact of this step on the different sectors on the economy. Going cashless is a big challenge in India, considering the fact that majority of the transactions are cash based, large chunk of the population are not educated enough to use electronic payment system, still part of country faces network issues. It remains to be seen how the regulators will handle these challenges and bring the desired results.

Pedagogical Objectives

• To understand the role of financial regulators (RBI) in the economy
• To understand monetary policy, fiscal policy and money supply in the financial systems
• To understand the impact of cashless economy on the society

Case Positioning and Setting

The case can be used for both first year MBA students for Macro-Economics course and second year MBA for the elective course Financial Institutions & Markets to elaborate the following themes:

a) Money and Banking
b) Money Supply and Central Bank

Mandatory Reading

The concepts of Money Supply, Monetary and Fiscal policy from any Macroeconomics textbook

Assignment Questions

I. How will cashless economy impact on the commercial banks and central bank?
II. How being cashless will impact the economy of developing countries?
III..............

.....................

$4.57
Rs 0
Product code: ME-1-0026, ME-1-0026A

Abstract

Over the past few years, we have seen unprecedented growth in the economies of the developing countries. With the opening up of markets, these countries have witnessed a rise in employment and productivity. Nevertheless, the scenario of the developed countries has been quite different. Many European countries have witnessed stagnant economic situations with interest rates hovering around the zero lower bound. These lower interest rates have urged Europeans to hoard cash rather than keeping it in the bank. With an urgent need to pump up inflation, these countries have adopted a strategy to move towards a cashless economy thereby rendering the hoarding of cash as illegal. A cashless economy enables the government to increase consumer spending and curb the existence of black money. Considering these benefits, many developing countries have taken measures of shifting towards a cashless economy. The government in these developing countries have increased incentives and promoted the use of digital payments but shifting to a cashless economy is going to be a major challenge. Cash-based transactions are still on a rise in developing countries and with majority of the population without a bank account, this becomes the only means for transaction. Apart from the operational challenges, there is going to be a huge impact on the framing of the monetary policy and the capability of the central bank in controlling money supply in the economy.


Pedagogical Objectives

  • To understand the role of financial regulators (RBI) in the economy
  • To understand monetary policy, fiscal policy and money supply in the financial systems
  • To understand the impact of cashless economy on the society

Case Positioning and Setting

This case study can be used for both first year MBA students for Macro-Economics course and second year MBA for the elective course Financial Institutions & Markets to elaborate the following themes: a) Money and Banking b) Money Supply and Central Bank

* FLAME CASE CONFERENCE 2017

This Case Pack Includes:
- Abstract
- Case Study
- Teaching Note (**ONLY for Academicians)
$4.57
Rs 0

Related products




Request for an Inspection Copy

(Strictly for Review Purpose, Not to be Used for Classroom Discussion/Trainings)