nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2021‒12‒13
thirteen papers chosen by
Marek Giebel
Universität Dortmund

  1. Broadband Internet and Social Capital By Andrea Geraci; Mattia Nardotto; Tommaso Reggiani; Fabio Sabatini
  2. Quantum Computing and the Financial System: Spooky Action at a Distance? By Tahsin Saadi Sedik; Mr. Michael Gorbanyov; Majid Malaika
  3. Central Bank Risk Management, Fintech, and Cybersecurity By Mr. Ashraf Khan; Majid Malaika
  4. Digital Economy: A New Prospect for Korea's New Southern Policy By Kim, Jeong Gon; Lee, Jaeho; Kim, Jegook
  5. Evolution of the EU market share of robotics: Data and Methodology By Nestor Duch-Brown; Fiammetta Rossetti; Richard Haarburger
  6. Financial determinants of informal financial development in Sub-Saharan Africa By Simplice A. Asongu; Valentine B. Soumtang; Ofeh M. Edoh
  7. Home sweet home: Assessment of Readiness of Croatian Companies to Introduce I4.0 Technologies By Rajka Hrbić; Tomislav Grebenar
  8. The Irrational Market: Considering the effect of the online community Wall Street Bets on Financial Market Variables By David William Witts; Emili Tortosa-Ausina; Iván Arribas
  9. Mobile DNA and Sleep Quality By Amez, Simon; Denecker, Floor; Ponnet, Koen; De Marez, Lieven; Baert, Stijn
  10. Opinion Dynamics with Conflicting Interests By Patrick Mellacher
  11. Digital and Financial Literacy as Determinants of Digital Payments and Personal Finance. By Lo Prete, Anna
  12. Avoiding a Trap and Embracing the Megatrends: Proposals for a New Growth Model in EU-CEE By Alexandra Bykova; Richard Grieveson; Doris Hanzl-Weiss; Gabor Hunya; Niko Korpar; Leon Podkaminer; Robert Stehrer; Roman Stöllinger
  13. Automation and its Employment Effects: A Literature Review of Automotive and Garment Sectors By Guendalina Anzolin

  1. By: Andrea Geraci; Mattia Nardotto; Tommaso Reggiani; Fabio Sabatini
    Abstract: We study the impact of broadband penetration on social capital in the UK. Our empirical strategy exploits a technological feature of the telecommunication infrastructure that generated substantial variation in the quality of Internet access across households. The speed of a domestic connection rapidly decays with the distance of a user's line from the network's node serving the area. Merging information on the topology of the network with geocoded longitudinal data about individual social capital from 1997 to 2017, we show that access to fast Internet caused a significant decline in civic and political engagement. Overall, our results suggest that broadband penetration crowded out several dimensions of social capital.
    Keywords: ICT; broadband infrastructure; networks; Internet; social capital; civic capital
    JEL: D91 L82 Z13
    Date: 2021–11
  2. By: Tahsin Saadi Sedik; Mr. Michael Gorbanyov; Majid Malaika
    Abstract: The era of quantum computing is about to begin, with profound implications for the global economy and the financial system. Rapid development of quantum computing brings both benefits and risks. Quantum computers can revolutionize industries and fields that require significant computing power, including modeling financial markets, designing new effective medicines and vaccines, and empowering artificial intelligence, as well as creating a new and secure way of communication (quantum Internet). But they would also crack many of the current encryption algorithms and threaten financial stability by compromising the security of mobile banking, e-commerce, fintech, digital currencies, and Internet information exchange. While the work on quantum-safe encryption is still in progress, financial institutions should take steps now to prepare for the cryptographic transition, by assessing future and retroactive risks from quantum computers, taking an inventory of their cryptographic algorithms (especially public keys), and building cryptographic agility to improve the overall cybersecurity resilience.
    Keywords: quantum computing; quantum-safe encryption; cybersecurity; fintech.; fintech; functioning quantum computer; computing technology; quantum machine; encryption standard; hardware capability; cloud service; Computer science; Migration; Financial sector; Global
    Date: 2021–03–12
  3. By: Mr. Ashraf Khan; Majid Malaika
    Abstract: Based on technical assistance to central banks by the IMF’s Monetary and Capital Markets Department and Information Technology Department, this paper examines fintech and the related area of cybersecurity from the perspective of central bank risk management. The paper draws on findings from the IMF Article IV Database, selected FSAP and country cases, and gives examples of central bank risks related to fintech and cybersecurity. The paper highlights that fintech- and cybersecurity-related risks for central banks should be addressed by operationalizing sound internal risk management by establishing and strengthening an integrated risk management approach throughout the organization, including a dedicated risk management unit, ongoing sensitizing and training of Board members and staff, clear reporting lines, assessing cyber resilience and security posture, and tying risk management into strategic planning.. Given the fast-evolving nature of such risks, central banks could make use of timely and regular inputs from external experts.
    Keywords: IMF Risk Management TA; risk landscape; B. IMF AIV; IMF surveillance; case example; Fintech; Central bank risk management; Cyber risk; Operational risk; Global; Middle East and Central Asia; Asia and Pacific; Western Hemisphere; Eastern Europe
    Date: 2021–04–23
    Abstract: Korea's cooperation with Southeast Asian countries and India(New Southern Policy countries) has been mainly focused on the establishment of manufacturing production networks. Recently, the need to add a new dimension to the existing framework of cooperation is being raised. The demand in sectors related to the digital economy of those countries is increasing. Many of the NSP countries are now striving to achieve economic and industrial leaps through implementing digital transformation. Considering the mid- and long-term economic development directions of Korea and the NSP countries, it is necessary to pay attention to the digital economy as a new area of mutual prosperity. Southeast Asian countries and India have strong potentials for digital transformation with the high economic growth, large population, high ICT utilization levels, etc. Conditions for trade and investment are also favorable as their economic openness is being achieved. Korea and the NSP countries need to establish a comprehensive digital economy cooperation platform. Through this, Both sides can inform partners of their digital economy-related agenda/interests and discuss ways for cooperation. Especially, it will provide chances for participants to identify mutual cooperation needs efficiently and specifically. Innovative small businesses and startups should be the focus of the cooperation. For Korean side, based upon thorough and comprehensive understanding on the NSP countries' social and economic context, cooperation focusing on their urgent demands is of great importance.
    Keywords: Korea; New Southern Policy; India; digital; economy; platform
    Date: 2020–11–02
  5. By: Nestor Duch-Brown (European Commission - JRC); Fiammetta Rossetti (European Commission - JRC); Richard Haarburger (European Commission - JRC)
    Abstract: One of the objectives of the AI WATCH is to calculate the EU robotics market shares over the past ten years. To this end, this report, first, provides a review of the robotics industry, and looks at the official definitions of both industrial and services robots. Second, the report offers a review of the scientific and institutional literature looking at the economic impact of robotics. Third, it describes the different statistical data sources, identified through a comprehensive search, offering relevant information about the robotics industry. Fourth, it provides an initial overview of the European robotics market shares from the different data sources identified. The identification of existing robotics data sources will contribute to the construction of a methodology to assess the EU shares concerning adoption and production of robots. The main objective is to establish the basis for a suitable database that will allow tracing the evolution of EU shares in the global robotics market over the past ten years, ideally disentangling between industrial and service robots. This report sketches such methodology, while it also identifies the main data gaps and challenges to integrating the heterogeneous information from different data sources into a coherent database, in order to derive consistent estimates of the EU market share in robotics. Such methodology will have to account for data challenges (e.g., missing data, development of sound merging techniques) so that the EU trends of robotics can be assessed along the most important dimensions (i.e. demand vs supply, industrial vs service robots), and aiming to provide relevant information to the policies of the European Commission for Robotics and Artificial Intelligence.
    Keywords: Robots, robotics industry, industrial robots, service robots
    Date: 2021–11
  6. By: Simplice A. Asongu (Yaounde, Cameroon); Valentine B. Soumtang (University of Yaoundé II, Cameroon); Ofeh M. Edoh (Yaoundé, Cameroon)
    Abstract: This study assesses financial determinants of informal financial sector development in 48 Sub-Saharan African countries for the period 1995-2017. Quantile regressions are used as the empirical strategy which enables the study to assess the determinants throughout the conditional distribution of informal sector development dynamics. The following financial determinants affect informal financial development and financial informalization differently in terms of magnitude and sign: bank overhead costs; net internet margin; bank concentration; return on equity; bank cost to income ratio; financial stability; loans from non-resident banks; offshore bank deposits and remittances. The determinants are presented from a plethora of perspectives, inter alia: U-Shape, S-Shape and positive or negative thresholds. The study not only provides a practical way by which to assess the incidence of financial determinants on informal financial sector development, but also provides financial instruments by which informal financial development can be curbed.
    Keywords: Informal finance; financial development; Africa
    Date: 2021–08
  7. By: Rajka Hrbić (The Croatian National Bank, Croatia); Tomislav Grebenar (The Croatian National Bank, Croatia)
    Abstract: The main topic of this paper is to estimate the possibility and inclination of Croatian companies towards technology and inovation as well as to analize advantages, limitations and risks involved with this significant technological leap. In this paper, we analized 7.147 of Croatian business entities operating in different industries. Starting point in this research is to identify other subjects which could be users of I4.0 or its elements, based on the simmilarity of indicators with indicators of a sample of 58 identified I4.0 companies. We developed machine learning model by using eXtreme Gradient Boosting algoritm (XGBoost) for this purpose, an approach which has not been used in any similar reserches. This research shows that the main difference between I4.0 and traditional industry is mostly observable in significantly better businesess performance of investment indicators, cost efficiency, technical equipment and market competitivness. Riskiness of I4.0 companies is significantly lower than the riskiness of traditional ones. We identified 141 companies (1,97% of total analized sample) as potential users of I4.0, which make around 27% of total assets of the analised sample and around 26% of revenues.
    Keywords: Industry 4.0, eXtreme Gradient Boosting (XGBoost), artificial intelligence, robotics, high-tech companies, machine learning, impacts of I4.0 on bussines results
    JEL: C45 D22 D24 O14 O32 O33
    Date: 2021–03
  8. By: David William Witts (Business School, Durham University, UK); Emili Tortosa-Ausina (IVIE, Valencia and IIDL and Department of Economics, Universitat Jaume I, Castellón, Spain); Iván Arribas (IVIE, ERI-CES and Department of Economic Analysis, Universitat de València, Spain)
    Abstract: The rise of the Internet, social media and the unfettered access to financial markets has fostered a new era of retail investing. Investing is no longer the activity of the professional, but is available to all, and being exploited to the greatest extent by users of Wall Street Bets. This research considered the implications of retail investors within the Wall Street Bets community on financial markets. Utilising VAR, ARDL and VECM models, we find that Wall Street Bets sentiment provides some incremental investment information, illustrating short-term predictive power over returns of specific assets, and may be beneficial in forecasting short-term volatility and trading volume.
    Keywords: ARDL models, Reddit, Sentiment Analysis, VADER, Wall Street Bets
    JEL: G1 G40 G41 C58 D53
    Date: 2021
  9. By: Amez, Simon (Ghent University); Denecker, Floor (Ghent University); Ponnet, Koen (Ghent University); De Marez, Lieven (Ghent University); Baert, Stijn (Ghent University)
    Abstract: Previous studies have demonstrated a strong negative association between smartphone use and sleep quality. However, the majority of these studies quantified smartphone use with subjective self-reported metrics. In contrast, the current study contributes to the literature by objectively logging university students' smartphone use and investigating the association thereof with sleep quality. The extensive, nuanced smartphone usage information obtained from this logging also enables us to explore the validity of several mechanisms theorised to underlie the previously reported negative association between smartphone use and sleep quality. In contrast to earlier research, we do not find a significant association between sleep quality and the duration or frequency of students' daily smartphone use. However, students with the internalised habit of launching a greater number of applications per session ('gateway habits') experience worse sleep quality. This finding is consistent with literature showing that smartphone-related stress is more strongly associated with checking habits stemming from 'fear-ofmissing-out' than with overall screen time.
    Keywords: mobile DNA, smartphone use, smartphone use logging, fear-of-missing-out, gateway habits, sleep quality
    JEL: I10 L86
    Date: 2021–10
  10. By: Patrick Mellacher
    Abstract: I develop a rather simple agent-based model to capture a co-evolution of opinion formation, political decision making and economic outcomes. I use this model to study how societies form opinions if their members have opposing interests. Agents are connected in a social network and exchange opinions, but differ with regard to their interests and ability to gain information about them. I show that inequality in information and economic resources can have a drastic impact on aggregated opinion. In particular, my model illustrates how a tiny, but well-informed minority can influence group decisions to their favor. This effect is amplified if these agents are able to command more economic resources to advertise their views and if they can target their advertisements efficiently, as made possible by the rise of information technology. My results contribute to the understanding of pressing questions such as climate change denial and highlight the dangers that economic and information inequality can pose for democracies.
    Date: 2021–11
  11. By: Lo Prete, Anna (University of Turin)
    Abstract: This work documents that, across countries, the use of digital payment tools and platforms is associated to higher digital literacy, at all levels of financial literacy. More informed personal finance choices, instead, are associated to higher financial literacy, at all levels of digital literacy. The results from this preliminary analysis suggest that digital and financial literacy should be considered together when assessing the implication of digitalization for individual investors, who can access digital financial products and markets in the absence of financial literacy.
    Date: 2021–11
  12. By: Alexandra Bykova (The Vienna Institute for International Economic Studies, wiiw); Richard Grieveson (The Vienna Institute for International Economic Studies, wiiw); Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Gabor Hunya (The Vienna Institute for International Economic Studies, wiiw); Niko Korpar (The Vienna Institute for International Economic Studies, wiiw); Leon Podkaminer (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Roman Stöllinger (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: It is now over three decades since the eleven EU member states in Central, Eastern, and Southeastern Europe (EU-CEE) started their transition to market capitalism. All countries experienced deep recessions in the early 1990s, but since have achieved mostly sustained convergence with Western Europe. Many EU CEE countries have overtaken Southern EU member states in terms of economic development. However, growth rates have slowed since the 2008 crisis, and the level of economic and social development varies widely across the region. This study has three key components. First, it establishes that the existing EU-CEE growth model may be reaching its limit, especially for the region’s most developed countries. Second, it details the megatrends which will further impact the region’s growth model now and in the future, including demographic, environmental, and digital factors. Finally, it outlines a set of policy options to develop the region’s growth model in a way that would drive a more sustained and sustainable rate of convergence with Western Europe in the coming decades. We find that governments in the region need to a) provide an underlying infrastructure that can support the growth of internationally competitive companies, b) fully embrace and take advantage of the digital revolution, c) maximise all available resources to profit from the green transition, and d) use policy levers to stimulate the automation of low productivity jobs and ease the transition into new and higher value work for their populations. Behind this should stand two important supportive pillars accommodative fiscal and monetary policy at the national and EU levels and a more progressive tax system to fund an expanded welfare state.
    Keywords: EU-CEE, transition, convergence, functional specialisation, digitalisation, green transition, EU, demographics, FDI, industrial policy
    JEL: O40 O47 P27 F21 O44 L16
    Date: 2021–11
  13. By: Guendalina Anzolin (King's College London)
    Abstract: Over the past decade, the interest around automation and digitalisation processes gained considerable attention both due to industrial and productivity related dynamics that stem from such processes and for their effects on employment. A better understanding of such dynamics, away from futuristic and apocalyptic views and closer to what happens at the shopfloor level are crucial to disentangle the effects of automation on labour and to provide insights both at the research and policy making levels. This paper attempts to dig into this subject looking at technological change as an incremental – rather than disruptive – type of process, like the slow and incremental process that characterised previous waves of technological change. Digital and automated technologies are then defined as bundles of innovations, which are selectively integrated into existing systems and for specific objectives. Against this background, this paper contributes to the existing literature in two aspects: it critically engages in a literature review of the recent studies on the effects that automation technologies have on two manufacturing sectors - i.e., automotive and labour – with a focus on the gender dimension that try to emphasise the effects on female workers. Secondly, it presents an in-depth review of the technologies that are widely discussed under the 4.0 label, addressing their degree of automation and their level of disruptiveness of existing systems.
    Keywords: Automation, Employment, Manufacturing, Industry 4.0
    Date: 2021–11

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