I'm sure somebody who has worked in the industry will be able to answer "why use casino chips instead of cash" better than I can, but here are a couple of reasons I can think of:

1. Chips can be handled much easier than cash, especially when a game is moving quickly. It's much easier and faster to quickly calculate the sum of a stack of chips in varying colors than greenbacks where each one must be examined to determine the denomination (as well as whether it might be counterfeit). Large numbers of chips can be racked quickly, versus the tedious procedure of counting and recounting stacks of currency.

2. It'd much more difficult for a dealer or player to steal from the casino when there is less cash flying around the table. Cash goes into a secured box and flows to the count room.

3. Players may tend to play longer and risk more when playing with chips than with currency IMHO.