nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2016‒04‒30
eight papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. The Use of Distributed Ledger Technologies in Payment, Clearing, and Settlement : a speech at the Institute of International Finance Blockchain Roundtable, Washington, D.C., April 14, 2016. By Brainard, Lael
  2. A pathway to financial inclusion: mobile money and individual Savings in Uganda By Lwanga, Musa; Adong, Annet
  3. Social network effects on mobile money adoption in Uganda By Murendo, Conrad; Wollni, Meike; de Brauw, Alan; Mugabi, Nicholas
  4. How to Catch a Unicorn. Case Studies By Jean Paul Simon
  5. Developments In International Mobile Roaming By Frédéric Bourassa; Sam Paltridge; Verena Weber; Yuki Yokomori; Dimitri Ypsilanti
  6. Effect of financial literacy on willingness to pay for micro-insurance by commercial market business operators in Ghana By Yeboah, Augustine Kwadwo; Obeng, Camara Kwasi
  7. Measuring the Perceived Impact of Internet on Individuals in Rural India By Jain, Rekha
  8. Formal versus informal: Efficiency, inclusiveness, and financing of dairy value chains in India: By Birthal, Pratap S.; Chand, Ramesh; Joshi, Pramod Kumar; Saxena, Raka; Rajkhowa, Pallavi; Khan, Md. Tajuddin; Khan, Mohd Arshad; Chaudhary, Khyali R.

  1. By: Brainard, Lael (Board of Governors of the Federal Reserve System (U.S.))
    Date: 2016–04–14
  2. By: Lwanga, Musa; Adong, Annet
    Abstract: This study provides a micro perspective on the impact that mobile money services have on an individual’s saving behavior using 2013 Uganda FinScope data. The results show that although saving through mobile phones is not a common practice in Uganda, being a registered mobile money user increases the likelihood of saving with mobile money. Using mobile money to save is more prevalent in urban areas and in the central region than in other regions. This can be explained by several factors. First, rural dwellers on average tend to have lower incomes and thus have a lower propensity to save compared with their urban counterparts. Second, poor infrastructure in rural areas in terms of the lack of electricity and poor telecommunication network coverage may limit the use of mobile phones and consequently the use of mobile money as a saving mechanism. Overall, the use of mobile money as a saving mechanism is still very low, which could be partly explained by legal limitations that do not incorporate mobile finance services into mobile money. The absence of interest payments on mobile money savings may also act as a disincentive to save through this mechanism. Given the emerging mobile banking services, there is need to create greater awareness and to enhance synergies between telecoms companies and commercial banks.
    Keywords: Mobile Money, Financial Inclusion, Savings, Uganda, Community/Rural/Urban Development, Consumer/Household Economics, Demand and Price Analysis, Financial Economics, Institutional and Behavioral Economics, Political Economy, Public Economics, Risk and Uncertainty,
    Date: 2016–03
  3. By: Murendo, Conrad; Wollni, Meike; de Brauw, Alan; Mugabi, Nicholas
    Abstract: Social networks play a vital role in generating social learning and information exchange that can drive the diffusion of new financial innovations. This is particularly relevant for developing countries where education, extension and financial information services are underprovided. This article identifies the effect of social networks on the adoption of mobile money by households in Uganda. Using data from a household survey, conditional logistic regression is estimated controlling for correlated effects and other information sources. Results show that mobile money adoption is positively influenced by the size of social network members exchanging information, and the effect is more pronounced for non-poor households. The structure of social network however has no effect. The findings show that information exchange through social networks is crucial for adoption of mobile money. Mobile money adoption is likely to be enhanced if promotion programs reach more social networks.
    Keywords: social networks, mobile money, adoption, Uganda, Consumer/Household Economics, Research and Development/Tech Change/Emerging Technologies, D14, D85, O33, Q12,
    Date: 2015
  4. By: Jean Paul Simon
    Abstract: Technology companies with high market capitalisation (often called unicorns) have been receiving a lot of attention and media coverage recently. In general, unicorns are IT-centric (software mostly, but also hardware). They are often rather young global companies that match unsatisfied demand with supply through the production (which can easily be scaled up) of innovative and usually affordable services and products. These are usually part of the mobile internet wave, and rely on connectivity (high speed networks, mobile and fixed), new devices (smartphones, tablets, phablets…) and the opportunities these bring. They are grounded in network effects, and demand-side economies of scale and scope. They depend on a strong favourable business environment, developing organically and building on fast expanding markets (emerging economies, middle classes). They are Venture Capital-dependent and the competition for funding can generate impressive (i.e. inflated) valuations. These companies can be disruptive for other sectors and firms. This report aims to document the phenomenon by investigating a qualitative sample of 30 companies that have recently been valued above the one billion dollar threshold. It identifies some of their characteristics and the lessons to be learnt. The report has two parts: Part I contains the overall findings of the investigation and some suggestions for policy makers. Part II contains a detailed account of the case studies on which the investigation is based. They are published as separate documents
    Keywords: IT industry, technology, innovation, market capitalisation
    JEL: L00 L1 L2 L8 O3
    Date: 2016–04
  5. By: Frédéric Bourassa; Sam Paltridge; Verena Weber; Yuki Yokomori; Dimitri Ypsilanti
    Abstract: The Council adopted on 16 February 2012 the Recommendation of the Council on International Mobile Roaming which provides a set of policy principles to ensure effective competition, consumer awareness and protection, and a fair price level in international mobile roaming services. The objective of this report is to provide an overview of progress made in the implementation of the Recommendation to determine whether any further action is necessary in this area.
    Date: 2016–04–28
  6. By: Yeboah, Augustine Kwadwo; Obeng, Camara Kwasi
    Abstract: This study investigated the effect of financial literacy on willingness to pay for micro-insurance among informal commercial market business operators in Ghana. Heckman’s Two-Step Estimation Technique is used to examine data on 612 informal commercial market business operators from selected major urban market centres in Ghana. The results indicate that financial literacy increases the amount willing to pay for micro-insurance. Other determinants of willingness to pay for micro-insurance include marital status, dependents, savings, trust, premium payment mode and income. The study recommends that microfinance institutions should strengthen financial education to increase the uptake of micro-insurance.
    Keywords: Financial literacy; Willingness to pay; Microfinance; Micro-insurance; commercial market business operators, Ghana
    JEL: G0
    Date: 2016
  7. By: Jain, Rekha
    Abstract: Internet has greatly influenced the way individuals socialize, create and exploit economic opportunities and knowledge resources. However, previous studies on assessment of impact have largely been empirical and limited to examining the factors influencing adoption and usage of Internet only from a social and economic perspective. These have not considered the role of knowledge enhancement and exchange. In addition, few studies measure impact in an integrated manner and are based on theory. Consequently, the constituent dimensions of impact, their inter-relationships and their intensity have not been articulated. To develop a construct for measuring impact of Internet use, we have used two theoretical and complementary domains: Social Capital and Social Cognitive Theory. Since Internet is considered a network for social exchanges, a study of Perceived Impact of Internet would need to take into account the aspect of social capital consequent to adoption and usage of Internet. On another dimension, usage of Internet could lead to increase in economic capital due to enhanced opportunities for business or profession. Internet is also a source of knowledge that could enhance economic or social benefits by creating opportunities for businesses or professional growth. Thus what constitutes impact is a complex construct broadly manifested along social, economic and knowledge dimensions. Further, most studies of Internet impact have not examined the role of outcome expectations and self-efficacy, two important constructs from theory of Social Cognition, in driving Internet use. Our study is driven by the need to develop a theoretical model for measuring impact by identifying the underlying dimensions that constitute impact and creating a construct for measuring the same. Lack of studies of impact of Internet in developing countries, especially in rural areas was another driver. We have used a survey based instrument administered to Internet users covering two of the poorer districts in Jharkhand, and Madhya Pradesh, India. Principal Component Analysis was used to identify the latent perceptual dimensions that constitute impact. Subsequently, we used linear regression to posit the strengths of each identified dimension in contributing to Perceived Impact. The model highlights the importance of using Internet for overcoming vulnerabilities in a rural context, negative disconfirmation with respect to having Enhanced Scope of Work through Internet use and social context of knowledge creation and cognition. The negative disconfirmation could be attributed to possibly low self-efficacy or not completely fulfilled outcome expectations from available services. Lack of content in local language, poor presence of local websites, low presence of associates and partners on the Internet, and inadequate quality of Internet connectivity contribute to this.
  8. By: Birthal, Pratap S.; Chand, Ramesh; Joshi, Pramod Kumar; Saxena, Raka; Rajkhowa, Pallavi; Khan, Md. Tajuddin; Khan, Mohd Arshad; Chaudhary, Khyali R.
    Abstract: Despite a growing dairy industry in India, farmers’ lack of access to organized markets and institutional credit remains one of the major hindrances in improving the scale and productivity of dairying. Using data from a survey of 612 households from the state of Punjab, India, this paper evaluates farmers’ choices of dairy value chains and their financing mechanisms. The study finds that 62 percent of the sample farmers representing 69 percent of the total milk sales are connected with formal value chains driven by cooperatives, multinational companies and private domestic processors. Small dairy farmers are associated more with informal value chains but they are not excluded from the formal value chains. The performance of different value chains in terms of productivity and profitability of dairying is almost on par. Also, there is hardly any difference in the milk price offered by formal and informal buyers pointing towards milk market being competitive. More than half of the farmers borrow credit both from within and outside the chain for dairying related activities. Chain-based financing is restricted to only one-fourth of the borrowers and mostly to those associated with informal value chains. Financing by commercial banks and other financial institutions is limited to only 9 percent of the borrowers, mainly larger farmers. The socially-disadvantaged and smallholder farmers are often neglected in institutional lending because of their lack of physical assets to use as collateral against loans. Value chain approach, due to its product market orientation, can serve as an entry point for financial institutions to improve their outreach to smallholders. The innovative financial products, such as ‘dairy credit card’ and ‘contract as collateral’ would enable them to adopt yield-enhancing technology and inputs and also to scale up their dairy activity.
    Keywords: finance, dairy, credit, smallholders, informal sector, markets, economic development, microeconomics, value chains,
    Date: 2016

This nep-pay issue is ©2016 by Bernardo Bátiz-Lazo. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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