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on Payment Systems and Financial Technology |
| By: | de Brauw, Alan; Gilligan, Daniel O.; Herskowitz, Sylvan; Roy, Shalini |
| Abstract: | Mobile money can be a vehicle for improving financial access, particularly among disadvantaged populations. For mobile money systems to play this role, though, members of disadvantaged groups must both enroll in and begin to use mobile money systems. In this paper, we describe a randomized trial conducted in collaboration with a bank in Somali region, Ethiopia, that attempted to stimulate use among recent mobile money enrollees in areas near refugee camps. We provide one group with a small transfer to their mobile money account and another group is told they will receive a small transfer if they first make three transactions of any type within a promotional period. The unconditional transfer induces a 9.3 percentage point increase in customers making at least one transaction, while the conditional transfer has no significant effect. The effect is larger among men, but there is evidence that it also induces use among women. |
| Keywords: | access to finance; refugees; gender; digital technology; currencies; finance; mobile phones; Ethiopia; Eastern Africa; Africa |
| Date: | 2024–11–26 |
| URL: | https://d.repec.org/n?u=RePEc:fpr:gsspwp:162765 |
| By: | Daron Acemoglu; Asuman Ozdaglar; James Siderius |
| Abstract: | We consider the political consequences of the use of artificial intelligence (AI) by online platforms engaged in social media content dissemination, entertainment, or electronic commerce. We identify two distinct but complementary mechanisms, the social media channel and the digital ads channel, which together and separately contribute to the polarization of voters and consequently the polarization of parties. First, AI-driven recommendations aimed at maximizing user engagement on platforms create echo chambers (or “filter bubbles”) that increase the likelihood that individuals are not confronted with counter-attitudinal content. Consequently, social media engagement makes voters more polarized, and then parties respond by becoming more polarized themselves. Second, we show that party competition can encourage platforms to rely more on targeted digital ads for monetization (as opposed to a subscription-based business model), and such ads in turn make the electorate more polarized, further contributing to the polarization of parties. These effects do not arise when one party is dominant, in which case the profit-maximizing business model of the platform is subscription-based. We discuss the impact regulations can have on the polarizing effects of AI-powered online platforms. |
| JEL: | L10 M37 P40 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33892 |
| By: | Vlaicu, Razvan |
| Abstract: | Digital payments have increasingly been adopted by consumers and firms in Latin America and the Caribbean. This policy research paper analyzes recent post-pandemic data on digital payments in the region to describe adoption patterns, measure adoption gaps, and identify adoption barriers. The data reveal a positive trend in the use of financial accounts for receiving wages, and of payment apps and digital wallets for purchases in-person and online. Despite increased average adoption, sizable gaps remain both between countries and within countries. At the consumer level, factors associated with delayed adoption include low income, old age, indigenous status, and rural location. At the firm level, factors include small size, retail sector, and limited credit access. Four types of adoption barriers appear to be important: technological, economic, informational, and behavioral. These observations are supported with detailed microdata from Mexico. The paper proposes policy solutions for achieving digital payments inclusion of vulnerable consumers and firms. |
| Keywords: | digital payments;Adoption gaps;Adoption barriers;Financial inclusion |
| JEL: | D18 G23 G50 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14151 |
| By: | Abdul Khaliq |
| Abstract: | This study measures the impact of COVID-19 outbreaks on financial technology (FinTech) lending in Indonesia. Using monthly FinTech data published by Financial Services Authority (OJK) over the period 2018M02-2021M04, the article examines the impact of COVID-19 started on March 2020 on FinTech by adopting an interrupted time series (ITS) experiment. The estimation shows that the COVID-19 outbreaks negatively affect changes in FinTech lending level in Indonesia, but the changes in the trend are positive. Moreover, the COVID-19 has been found to have a negative and statistically significant effect on the 90-day success loan settlement rate level. However, COVID-19 has positive and statistically significant effects on the 90-day default rate of loan repayment level. These estimation results recommend that the financial services authority of Indonesia should intensively promote various innovative financial technology (FinTech) lending post-COVID-19 to increase digital financial inclusion by providing peer to peer lending (P2P) to unbanked populations. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.06655 |
| By: | David Aristei; Manuela Gallo |
| Abstract: | This paper investigates the impact of objective financial knowledge, confidence in one's financial skills, and digital financial literacy on individuals' decisions to seek financial advice from robo-advice platforms. Using microdata from the Bank of Italy's survey on adults' "Financial Literacy and Digital Financial Skills in Italy", we find that individuals with greater financial knowledge are less inclined to rely on online services for automated financial advice. On the contrary, confidence in one's financial abilities and digital financial literacy enhance the likelihood of using robo-advice services. Trust in financial innovation, the use of digital financial services, and the propensity to take risks and save also emerge as significant predictors of an individual's use of robo-advice. We also provide evidence of a significant complementary relationship between using robo-advisory services and the demand for independent professional human advice. In contrast, a substitution effect is found for non-independent human advice. These findings highlight the importance of hybrid solutions in professional financial consulting, where robo-advisory services complement human financial advice. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.20527 |
| By: | Mr. Eugenio M Cerutti; Melih Firat; Martina Hengge |
| Abstract: | Cross-border payments are essential to the global financial system, facilitating trade and investment. The global cross-border traditional and crypto payment market approached a value of about one quadrillion dollars in 2024, with crypto payments representing only a small fraction despite their recent surge. Focusing on data from Swift—the largest traditional cross-border financial messaging network—we study the characteristics and evolving patterns of these payments over 2021-24. Notably, payments are predominantly concentrated in advanced economies, and are driven by financial institutions and large transactions. While currency usage remains stable—with the U.S. dollar maintaining the largest share—the Chinese renminbi demonstrates signs of increasing global integration, albeit from a low base. Gravity model estimates confirm that traditional economic linkages, via trade, portfolio investment, and FDI, shape cross-border payments. However, aggregate dynamics mask substantial heterogeneity across message types (customer vs. financial related payments), currencies, and transaction sizes, with information asymmetries playing a diminished role in larger payments. |
| Keywords: | Cross-Border Payments; Trade; FDI; Portfolio Investment; Networks |
| Date: | 2025–06–13 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/120 |
| By: | Elena Falcettoni; Vegard Nygaard |
| Abstract: | We propose a new way to classify individuals without a bank account, accounting for their actual interest in being banked. Analogous to how unemployment statistics are defined and estimated, we differentiate the individuals that do not have a bank account and would like to have one (the “unbanked”) from individuals that do not have a bank account and are not interested in having one (the “out of banking population”). Using FDIC data, we show the evolution over time of these new measures and show that the two groups differ in policy-relevant ways. While the unbanked mostly cite financial and past credit or banking history problems as reasons for not having a bank account, the out of banking population cites a growing mistrust toward the traditional banking system. Policymakers should consider these factors when designing policies aimed at increasing financial inclusion. |
| Keywords: | FDIC; Banking; Checking Fintech; Financial inclusion |
| Date: | 2025–05–09 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-33 |
| By: | Jens-Uwe Franck; Mauro Hartl |
| Abstract: | The Digital Markets Act (DMA) accepts certain negative short-term effects on the welfare of users of core platform services in order to achieve fairness and contestability in the long run. In this paper, we illustrate and analyse the more critical case where the regulatory rigidity of the DMA leads to side effects that clearly run counter to these regulatory objectives, as the implementation of the DMA by one platform consolidates the entrenched position of another core platform service. We develop four theses in this regard: (i) such side effects are undesirable but do not justify a limited enforcement of a particular obligation; (ii) adopting specifying measures to prevent such effects would exceed the regulatory leeway granted to the Commission under Article 8(2) of the DMA; (iii) there may be indirect effects on the scope of other DMA provisions that mitigate undesirable effects; (iv) undesirable side effects need to be addressed through anttitrust and other regulatory instruments. As a paradigmatic example, we analyse how the ban on self-preferencing has been implemented by Google with regard to hotel search queries. In doing so, we consider several open questions regarding the ban on self-preferencing and show how the status quo of Google’s display of hotel search results (still) violates Article 6(5) of the DMA. |
| Keywords: | Digital Markets Act; Google Search; self-preferencing; specifying procedure; implementing acts; disintermediation; Booking.com |
| JEL: | K21 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_692 |
| By: | Balana, Bedru; Olanrewaju, Opeyemi |
| Abstract: | This paper examines the effects of financial inclusion on adoption and intensity of use of agricultural inputs and household welfare indicators using data from the nationally representative Nigerian LSMS wave-3 (2015/2016) survey. For this, we constructed a financial inclusion index from four formal financial services access indicators (bank account, access to credit, insurance coverage, and digital transaction) using multiple correspondence analysis (MCA). We used Cragg’s two-step hurdle, instrumental variables for binary response variables, and a Generalized Method of Moments (GMM) models in the econometric analysis. Results show that households with access to formal financial services are more likely to adopt agricultural inputs and to apply these more intensively. These same households are less likely to experience severe food insecurity and are more likely to consume diverse food items. We also find that these effects are less for female farmers regardless of formal financial inclusion, suggesting that they may bear more non-financial constraints than their male counterparts. The results suggest a need for targeted interventions to increase access to formal financial services of farm households and gender-responsive interventions to address the differential constraints women farmers face. |
| Keywords: | farm inputs; financial inclusion; food security; households; inorganic fertilizers; seeds; Nigeria; Africa; Western Africa |
| Date: | 2024–11–21 |
| URL: | https://d.repec.org/n?u=RePEc:fpr:gsspwp:162588 |
| By: | F. Annaki; S. Ouassou; S. Igamane |
| Abstract: | This study explores the dynamics of visibility and influence in digital social relations, examining their implications for the emergence of a new symbolic capital. Using a mixedmethods design, the research combined semi-structured interviews with 20 digitally active individuals and quantitative social media data analysis to identify key predictors of digital symbolic capital. Findings reveal that visibility is influenced by content quality, network size, and engagement strategies, while influence depends on credibility, authority, and trust. The study identifies a new form of symbolic capital based on online visibility, influence, and reputation, distinct from traditional forms. The research discusses the ethical implications of these dynamics and suggests future research directions, emphasizing the need to update social theories to account for digital transformations. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.08797 |
| By: | Tomoo Kikuchi; Lien Pham |
| Abstract: | We develop a model of strategic competition between global currencies. Issuers choose their commitment levels for currency internationalization, while users -- interconnected in a trade network -- choose their usage of each currency for trade settlement. Our theoretical findings highlight not only the advantage of the status-quo issuer in maintaining dominance, but also the conditions under which an emerging issuer can attract users, potentially leading to a multi-currency payment system. The network centrality of users plays a key role in shaping both their currency choices and the strategic commitment levels of issuers. Our framework offers testable implications for the share of global currencies for trade settlement by linking the network structure, the strategy of issuers and the currency choice of users. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.22080 |
| By: | Wishnu Badrawani |
| Abstract: | This study aims to evaluate the adoption of Bank Indonesia's QRIS (Quick Response code Indonesian Standard) payment system policy. The evaluation is hindered by the contemporaneous emergence of the COVID-19 pandemic, which acts as a confounding factor in adopting the new payment instrument. To disentangle the impact of central bank policy from the pandemic, a novel variation of the model of Unified Theory of Acceptance and Use of Technology (UTAUT) is proposed and is estimated using purposive sampling from an online survey with 572 respondents during the pandemic. The result of the study successfully disentangles the policy effect from the pandemic effect, and also separate the risk of pandemic with common risks (PR) and other technology adoption determinants. The results indicate that perceived central bank policy and pandemic risk are the most influential variables affecting the intention to use QRIS. The findings suggest that this measurement approach can be appropriately used as a complementary tool to examine the effectiveness of the central bank's policy in influencing people's behavior. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.11695 |
| By: | Whyte, Jamie |
| Abstract: | Debanking became a news story in 2023 when Nigel Farage alleged that Coutts had closed his account because its executives disapproved of his political opinions. A study by the Financial Conduct Authority (FCA) revealed that such ideologically motivated account closures are vanishingly rare. Nevertheless, debanking is a problem in the UK. In 2021/22, UK banks closed 343, 000 accounts. In about half of those cases, the reason was that the bank could not satisfy itself that the customer was not involved in money laundering or other financial crimes. The penalties for failing to comply with the government's anti-money laundering (AML) regulations can run into hundreds of millions or even billions of pounds. Certain kinds of customers present a relatively high prima facie risk of being involved in money laundering. But the cost of discovering whether they really are criminals would exceed the value of their business. So, banks close their accounts - even though most of those people are innocent. Other customers are also harmed. Complying with AML regulations costs UK banks £34 billion a year, twice what is spent on policing all other crimes put together. This cost is ultimately borne by bank customers. There is no evidence that AML regulations reduce crime, and the governments that impose them have not even tried to show that they do. With no evidence of benefits and the costs known to be massive, the AML regulations should be scaled back, for example by going back to the pre-2017 regulatory regime, if not further. That is unlikely to happen given politicians' enthusiasm for regulation and reluctance to admit error. In that case they should compensate banks for the compliance cost. This would remove the injustice of forcing bank customers to bear the cost of fighting crime. And it would make the extraordinary cost of AML regulations politically visible. |
| Keywords: | Money laundering, bank account, regulation, compliance costs, Great Britain |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ieadps:314025 |
| By: | Moreno, Guadalupe |
| Abstract: | Money, capitalist market societies' paramount contract, relies on the belief in its enduring value. However, we still know surprisingly little about the social foundations that sustain that belief. How is our collective trust in the enduring value of money socially built, and what happens if people lose such trust? What if a society convinces itself that policymakers cannot guarantee that the value of money will persist over time? In this paper, I use Argentina as a monetary laboratory to study how almost eighty uninterrupted years of high inflation and successive currency crises led to a social trauma that crystalized in the emergence of a distrust narrative: a strong popular belief that neither the state nor the local financial system will be able to preserve the value of the national currency or the worth of savings over time. By analyzing the production and reproduction of this narrative and its longlasting effects on the Argentine economy, I show how rooted distrust in a currency fosters a myriad of practices aimed at protecting savings, which impose severe limits on monetary governance. I emphasize that when state authorities lose control of collective expectations and negative monetary imaginaries take off, a vicious cycle unfolds in which instability, inflation, and devaluation reinforce each other. |
| Abstract: | Geld als Fundament kapitalistischer Marktwirtschaften beruht auf dem Glauben an seinen dauerhaften Wert. Allerdings wissen wir immer noch erstaunlich wenig über die sozialen Grundlagen, die diesen Glauben stützen. Wie baut sich unser kollektives Vertrauen in den dauerhaften Wert des Geldes auf, und was passiert, wenn Menschen dieses Vertrauen verlieren? Was geschieht, wenn eine Gesellschaft zu dem Schluss kommt, dass die Politik nicht in der Lage ist, den bleibenden Wert des Geldes über die Zeit hinweg zu sichern? In diesem Discussion Paper nutze ich Argentinien als "monetäres Labor", um zu untersuchen, wie fast achtzig Jahre ununterbrochener hoher Inflation und aufeinanderfolgender Währungskrisen zu einem sozialen Trauma geführt haben. So bildete sich Misstrauensnarrativ heraus, eine starke Überzeugung in der Bevölkerung, dass weder der Staat noch das lokale Finanzsystem in der Lage sein werden, den Wert der nationalen Währung oder der Ersparnisse über die Zeit hinweg zu bewahren. Durch eine Analyse der Produktion und Reproduktion dieses Narrativs und seiner lang anhaltenden Auswirkungen auf die argentinische Wirtschaft zeige ich, wie tief verwurzeltes Misstrauen in eine Währung eine Vielzahl von Praktiken fördert, die auf den Schutz von Ersparnissen abzielen und die Geldpolitik stark einschränken. Wenn die Behörden die Kontrolle über die kollektiven Erwartungen verlieren und sich negative monetäre Vorstellungen in der Gesellschaft ausbreiten, entfaltet sich ein Teufelskreis, in dem sich Instabilität, Inflation und Abwertung gegenseitig verstärken. |
| Keywords: | central bank, civil society, financial crisis, governance, money, trust, Finanzkrise, Geld, Regierungsführung, Vertrauen, Zentralbank, Zivilgesellschaft |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:mpifgd:319606 |
| By: | Kim, Jungkeun; Cho, Areum; Baek, Tae Hyun; Park, Jooyoung; Bae, Joonheui |
| Abstract: | Luxury brands creating non-fungible tokens (NFTs) often face technical constraints that compromise visual aesthetics, potentially conflicting with their high-end image. This study investigates how the visual quality of NFTs and the presence of price information influence consumer perceptions of luxury goods in the metaverse across three experimental studies. Study 1 compared consumer evaluations across three conditions: good-quality NFT, poor-quality NFT, and no NFT. The findings revealed that poor NFT visual quality negatively influenced evaluations of the original product, with perceived authenticity identified as the key underlying mechanism. Study 2 examined whether this negative effect could be mitigated by the presence of price information. The results showed that a poor-quality NFT accompanied by price information resulted in more favorable evaluations of the original bag, regardless of style similarity. Study 3 replicated these findings using a three-condition design (low-price NFT, high-price NFT, and no NFT), demonstrating that the mitigating role of price information. Together, these findings contribute to the emerging digital fashion literature by highlighting the importance of visual quality and price transparency in NFT-based luxury marketing strategies within the metaverse. |
| Keywords: | metaverse; NFT; luxury goods; visual quality; perceived authenticity; price information; AAM requested |
| JEL: | L81 |
| Date: | 2025–10–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128334 |
| By: | Joann Jasiak; Cheng Zhong |
| Abstract: | We study the Functional PCA (FPCA) forecasting method in application to functions of intraday returns on Bitcoin. We show that improved interval forecasts of future return functions are obtained when the conditional heteroscedasticity of return functions is taken into account. The Karhunen-Loeve (KL) dynamic factor model is introduced to bridge the functional and discrete time dynamic models. It offers a convenient framework for functional time series analysis. For intraday forecasting, we introduce a new algorithm based on the FPCA applied by rolling, which can be used for any data observed continuously 24/7. The proposed FPCA forecasting methods are applied to return functions computed from data sampled hourly and at 15-minute intervals. Next, the functional forecasts evaluated at discrete points in time are compared with the forecasts based on other methods, including machine learning and a traditional ARMA model. The proposed FPCA-based methods perform well in terms of forecast accuracy and outperform competitors in terms of directional (sign) of return forecasts at fixed points in time. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.20508 |
| By: | Mana KANEKO; Katsushi SUZUKI |
| Abstract: | This paper analyzes the evolution of adoption and rejection patterns of robo-advisor services in Japan using panel survey data collected by the Japan Securities Dealers Association from 2017 to 2023, following the initial market introduction of these services. The empirical results show that demographic and socioeconomic characteristics—such as age, residential location, personality traits, and income—associated with adopters and active rejecters changed significantly over time. In contrast, individuals with high financial literacy exhibited stable adoption or rejection behavior, unaffected by time trends. These findings are consistent with the predictions of Rogers' diffusion of innovations theory and contribute to the literature by offering new insights into the determinants of robo-advisor usage. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25050 |
| By: | Antonis Ballis |
| Abstract: | Global financial systems are undergoing strategic shifts as geopolitical tensions reshape international trade and payments. The United States (US)-China trade war, sanctions regimes, and rising concerns over the weaponization of financial infrastructures like SWIFT have led countries to seek alternative networks, including China's CIPS and emerging cross-border CBDCs. This letter presents a dynamic theoretical framework where sanction risks, investment choices, and network effects drive payment system migration. Empirical evidence from Russia, Saudi Arabia, India, and Argentina supports the model. Policy implications point toward increasing financial fragmentation, with critical roles for international institutions to mitigate systemic risks. The future of finance may be less global and more regionally fragmented, influenced heavily by political considerations. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.21480 |
| By: | Heng Chen; Hongyu Xiao |
| Abstract: | Household mobility data can improve our measurement of access to cash. The existing literature typically assumes that households visit their nearest ABMs or financial institution branches from their homes, without combining cash withdrawals with other activities (i.e., on their way to shopping). However, the typical approach neglects two realistic features: The first is that, due to spatial agglomeration, cash access points could be co-located with popular points of interest, such as retail service centers; and, second, households could combine multiple trips, via trip-chaining, to reduce travel costs. Our paper employs smartphone data to construct an improved cash access metric by accounting for both spatial agglomeration and households’ travel patterns. We find that incorporating trip-chaining into the travel metric could show that travel costs are from 15% to 25% less than not incorporating trip-chaining and that the biggest decrease is driven by rural residents. |
| Keywords: | Bank notes; Financial services; Regional economic development |
| JEL: | D12 O18 R22 R41 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocawp:25-16 |
| By: | Jaehyun Kim; Hyungbin Park |
| Abstract: | In cryptocurrency markets, a key challenge for perpetual future issuers is maintaining alignment between the perpetual future price and target value. This study addresses this challenge by exploring the relationship between funding rates and perpetual future prices. Our results demonstrate that by appropriately designing funding rates, the perpetual future price can remain aligned with the target value. We develop replicating portfolios for perpetual futures, offering issuers an effective method to hedge their positions. Additionally, we provide path-dependent funding rates as a practical alternative and investigate the difference between the original and path-dependent funding rates. To achieve these results, our study employs path-dependent infinite-horizon BSDEs in conjunction with arbitrage pricing theory. Our main results are obtained by establishing the existence and uniqueness of solutions to these BSDEs and analyzing the large-time behavior of these solutions. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.08573 |
| By: | Lazarus, Suleman; Tickner, Peter; McGuire, Michael R. |
| Abstract: | We discuss cybercrimes against senior citizens from three standpoints: (a) online fraudsters often target senior citizens because of their age, which results in the propagation of ageism. Thus, we explicitly define ageism in the context of cybercrime, characterising it as the intentional targeting or prioritisation of senior citizens as potential victims of online fraud. (b) Senior citizens are vulnerable to online fraud schemes for physiological (e.g., cognitive decline), psychological (e.g., elevated fear of cybercrime), familial (e.g., insider fraud), and sociocultural (e.g., isolation) reasons. (c) Cybercrimes against older adults predominantly fall under the socioeconomic category driven by a common financial motive. We argue that ageism serves as a weapon used by online offenders to target older adults, whilst the concept of the ideal victim acts as society’s shield in response to these reprehensible actions. This framework invites closer attention to how age-based targeting in cyberspace reproduces broader social, economic, and moral asymmetries. Future empirical studies are warranted to substantiate these claims beyond the theoretical realm. |
| Keywords: | ageism and ageing; elder abuse; senior citizens; vulnerabilities and risk factors; ideal victim; online fraud |
| JEL: | J1 |
| Date: | 2025–06–21 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:123873 |