The Role of Cash in Household Savings

Ritzl, Ildikó and Száraz, Anikó and Bódi-Schubert, Anikó (2026) The Role of Cash in Household Savings. FINANCIAL AND ECONOMIC REVIEW, 25 (2). pp. 92-118. ISSN 2415-9271 (print); 2415–928X (online)

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Abstract

According to both domestic and international analyses, the stable behaviour of household cash holdings in developed countries is primarily attributable to cash holdings for accumulation purposes. In our study, we review the factors that characterised the holding of forint cash for accumulation purposes between 2022 and 2025 and examine the motives behind individual cash-holding decisions, based on the results of a survey conducted among the adult Hungarian population. Our findings suggest that households’ savings practices can be organised into a savings needs pyramid, in which cash plays a significant role in the safety reserve category, and individuals make what they perceive to be a rational decision regarding its holding in light of the foregone return. The mobilisation of funds held in liquid form as a safety reserve towards investment can be achieved by increasing institutional trust and reducing economic and social uncertainty.

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