nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2016‒08‒14
nine papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. A pathway to financial inclusion: mobile money and individual Savings in Uganda By Mayanja, Musa; Adong, Annet
  2. Mobile Money and Risk Sharing Against Aggregate Shocks By Emma Riley
  3. Mobile Phone Innovation and Inclusive Human Development: Evidence from Sub-Saharan Africa By Simplice Asongu; Agyenim Boateng; Raphael Akamavi
  4. Did the Target data breach change consumer assessments of payment card security? By Greene, Claire; Stavins, Joanna
  5. The Road to International Currency: Global Perspective and Chinese Experience By Liu, Tao; Wang, Xiaosong
  6. A framework to evaluate payment systems for cash transfer programmes: examples from Kenya By Valentina Barca; Alex Hurrell; Ian MacAuslan; Aly Visram; Jack Willis
  7. Regulation and Investment in Telecom Network Infrastructure Facilities: The Recent Developments and Debates By Ben Dkhil, Inès
  8. Mining Twitter data for fun and profit By Joseph Canner; Neeraja Nagarajan
  9. The FinTech Opportunity By Thomas Philippon

  1. By: Mayanja, 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, Financial Economics, Labor and Human Capital,
    Date: 2016–03
  2. By: Emma Riley
    Abstract: Households in developing countries have gained increased access to remittances through the recent introduction of mobile money services. While the benefits of improved risk sharing to the remittance receiver have been examined in past research, benefits to the wider community have not been looked into. I examine the impact of mobile money services on consumption smoothing after an aggregate shock for both users of mobile money and for household that don't use mobile money but who reside in villages with users. This allows me to determine the extent that remittances received via mobile money are shared within villages in which I cannot reject perfect risk sharing. Using a difference-in-difference fixed effects specication, I find that while having other mobile money users in the village increases the per capita consumption of the entire village, after an aggregate shock it is only users of mobile money who are able to prevent a drop in their consumption.
    Keywords: risk sharing; mobile money; Tanzania
    JEL: O16 O17 O33
    Date: 2016
  3. By: Simplice Asongu (Yaoundé/Cameroun); Agyenim Boateng (Glasgow, UK); Raphael Akamavi (Hull, UK)
    Abstract: A recent World Bank report reveals that poverty has been decreasing in all regions of the world with the exception of sub-Saharan Africa (SSA) as more than 45% of countries in the sub-region are off-track from achieving the Millennium Development Goal (MDG) extreme poverty target. This paper investigates the effects of mobile phone technology, knowledge creation and diffusion on inclusive human development in 49 SSA countries for the period 2000-2012 using Tobit model. The study finds that mobile phone penetration in SSA is pivotal to sustainable and inclusive human development irrespective of the country’s level of income, legal origins, religious orientation and the state of the nation. However, the pupil-teacher ratio exerts a negative influence on inclusive human development. The net effects of interactions between the mobile phone and knowledge diffusion variables are positive.
    Keywords: Mobile phones; inclusive human development; Africa
    JEL: G20 I10 I32 O40 O55
    Date: 2016–03
  4. By: Greene, Claire (Federal Reserve Bank of Boston); Stavins, Joanna (Federal Reserve Bank of Boston)
    Abstract: Previous research has found that perceptions of payment security affect consumers’ use of payment instruments. We test whether the Target data breach in 2013 was associated with a change in consumers’ perceptions of the security of credit cards and debit cards and with subsequent changes in consumers’ use of payment cards. Using data from the Survey of Consumer Payment Choice (SCPC), we find that, controlling for possible confounding effects of demographic differences between the two groups, ratings by consumers who assessed the security of personal information of debit cards shortly after the breach were lower than ratings by consumers who responded before the breach was reported. On average, the rating on the security of personal information of debit cards relative to the rating on the security of other payment instruments was 11.3 percent lower shortly after the Target breach. Based on prior research on the impact of security assessments on payment instrument use, we would expect a small (economically insignificant) decline in debit card use from this lower rating. However, we find no statistically or economically significant change in debit card use from 2013 to 2014. For credit cards, there was no difference in the ratings given by consumers who responded to the survey before the breach was reported and the ratings of those who responded after the breach was reported.
    Keywords: data breach; payment card security; Survey of Consumer Payment Choice; Target; debit card; credit card
    JEL: D14 D18
    Date: 2016–04–28
  5. By: Liu, Tao; Wang, Xiaosong
    Abstract: This paper studies the international currency use in financial transaction, with SWIFT dataset from 2011 to 2013. A currency becomes international when used outside of its issuing country, and advances to international vehicle currency if used among nonresidents. We estimate a gravity model to explain the geographical distribution of international currency use. For major currencies, higher level of integration and stable macroeconomic environment increase their international use. Specifically, trade and portfolio investment are more helpful in raising the direct use, while FDI has stronger effect in promoting the vehicle use. For RMB, trade improves the intensity of its global use, and FDI increases the number of its user. The policy effect on RMB internationalization is significant only for direct use. Additionally, major currencies experience death of distance, whereas RMB use is decreasing in geographical distance, implying its role to be more regional during this period. We recommend outward FDI by private Chinese firms to increase the vehicle use of RMB and make it truly international.
    Keywords: RMB internationalization, gravity model, policy effect, death of distance
    JEL: F33 F36 G15
    Date: 2016–07
  6. By: Valentina Barca (IPC-IG); Alex Hurrell (IPC-IG); Ian MacAuslan (IPC-IG); Aly Visram (IPC-IG); Jack Willis (IPC-IG)
    Abstract: "Cash transfers are increasingly being piloted and scaled up in sub-Saharan Africa, where current evidence suggests that they have positive impacts both as emergency and long-term social protection programmes. As with any programme, the operations of cash transfers strongly influence their impact, but analyses of cash transfers have paid much more attention to targeting than to payment systems. This briefing note argues that payment systems are important in terms of programme impact, provides a framework with which to analyse them, and considers three different payment systems from three cash transfer programmes evaluated by Oxford Policy Management (OPM) in Kenya". (?)
    Keywords: framework, evaluate, payment systems, cash transfer, programmes, examples, Kenya
    Date: 2016–07
  7. By: Ben Dkhil, Inès
    Abstract: The regulation has the greatest role in forcing the introduction and the establishment of competition in the fixed telecom markets by facilitating the entrants’ access conditions to the incumbent’s infrastructure facilities (the local loop). Recently, the sole way to ensure the development of telecom industry consists to promote innovation and investment in network infrastructure technologies. This paper provides a critical review of both recent theoretical and empirical literature that address the issues of regulation on innovation and investment in the fixed telecommunication in-frastructures.
    Keywords: bottleneck, access regulation policies, investment in network upgrade, service-based competition, facility-based competition.
    JEL: K21 L1 L12 L51
    Date: 2014–12–01
  8. By: Joseph Canner (Johns Hopkins University School of Medicine); Neeraja Nagarajan (Johns Hopkins University School of Medicine)
    Abstract: Twitter feed data has increasingly become a rich source of information, both for commercial marketing purposes and for social science research. In the early days of Twitter, researchers could access the Twitter API with a simple URL. In order to control the size of data requests and to track who is accessing what data, Twitter has instituted some security policies that make this much more difficult for the average researcher. Users must obtain unique keys from Twitter, create a timestamp, generate a random string, combine this with the actual data request, hash this string using HMAC-SHA1, and submit all of this to the Twitter API in a timely fashion. Large requests must be divided into multiple smaller requests and spread out over a period of time. Our particular need was to obtain Twitter user profile information for over 800 users who had previously tweeted about surgery. We developed a Stata command to automate this process. It includes a number of bitwise operator functions and other tools that could be useful in other applications. We will discuss the unique features of this command, the tools required to implement it, and the feasibility of extending this example to other data request types.
    Date: 2016–08–10
  9. By: Thomas Philippon
    Abstract: This paper assesses the potential impact of FinTech on the finance industry, focusing on financial stability and access to services. I document first that financial services remain surprisingly expensive, which explains the emergence of new entrants. I then argue that the current regulatory approach is subject to significant political economy and coordination costs, and therefore unlikely to deliver much structural change. FinTech, on the other hand, can bring deep changes but is likely to create significant regulatory challenges.
    JEL: G2 G38 L1 L4 O3
    Date: 2016–08

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