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on Payment Systems and Financial Technology |
| By: | Joseph E. Stiglitz |
| Abstract: | Modern technology provides the basis of an efficient low-cost electronic payments as an alternative to the current system where fiat money is the medium of exchange. This paper explores possible macro-economic implication, showing how such a financial system might enhance government’s ability to control the level of aggregate demand. As in other arenas, in second-best situations with uncertainty, systems where there is an attempt to directly control quantities directly may perform better (e.g. have less volatility) than those using prices and other indirect control mechanisms. The paper identifies conditions under which in a system of electronic money, macroeconomic variability is lower when the level and direction of credit creation is directly controlled, through appropriately designed credit auctions, than in a system of indirect control of, say, investment via the interest rate. This is especially important since much macro-economic instability is associated with instability in credit creation and in the fraction allocated to newly produced goods and services. The paper also explains how, in an open economy, in a system of electronic money, credit auctions combined with trade chits might enable the control of net exports, again enhancing macro-stability. Finally, we explain how under a system of electronic money, the rents that are currently associated with credit creation and that arise from bank franchises—that constitute a form of appropriation of the returns from trust in the government and its ability and willingness to bail-out banks in the event of a crisis or bank run—could be appropriated by the government to a greater degree than at present. |
| JEL: | E42 E44 E51 E52 F32 F38 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23032&r=pay |
| By: | Mara Faccio; Luigi Zingales |
| Abstract: | We study how political factors shape competition in the mobile telecommunication sector. We show that the way a government designs the rules of the game has an impact on concentration, competition, and prices. Pro-competition regulation reduces prices, but does not hurt quality of services or investments. More democratic governments tend to design more competitive rules, while more politically connected operators are able to distort the rules in their favor, restricting competition. Government intervention has large redistributive effects: U.S. consumers would gain $65bn a year if U.S. mobile service prices were in line with German ones and $44bn if they were in line with Danish ones. |
| JEL: | D72 L11 P16 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23041&r=pay |
| By: | Gabriele Camera (Economic Science Institute, Chapman University and WWZ, University of Basel) |
| Abstract: | The institution of money is rapidly evolving thanks to developments in computerbased cryptography. Technological advances have made possible the creation of cost-effective electronic alternatives to banknotes and coins, which are the traditional physical currencies. This document aims to describe — based on scientific literature — the use and characteristics of money, some of the problems associated with issuing a new currency or a new payment instrument, and the possible comparative advantages of a central bank in leading the way relative to private issuers. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:16-32&r=pay |
| By: | Klaus Ackermann; Simon D Angus; Paul A Raschky |
| Abstract: | With the large-scale penetration of the internet, for the first time, humanity has become linked by a single, open, communications platform. Harnessing this fact, we report insights arising from a unified internet activity and location dataset of an unparalleled scope and accuracy drawn from over a trillion (1.5$\times 10^{12}$) observations of end-user internet connections, with temporal resolution of just 15min over 2006-2012. We first apply this dataset to the expansion of the internet itself over 1,647 urban agglomerations globally. We find that unique IP per capita counts reach saturation at approximately one IP per three people, and take, on average, 16.1 years to achieve; eclipsing the estimated 100- and 60- year saturation times for steam-power and electrification respectively. Next, we use intra-diurnal internet activity features to up-scale traditional over-night sleep observations, producing the first global estimate of over-night sleep duration in 645 cities over 7 years. We find statistically significant variation between continental, national and regional sleep durations including some evidence of global sleep duration convergence. Finally, we estimate the relationship between internet concentration and economic outcomes in 411 OECD regions and find that the internet's expansion is associated with negative or positive productivity gains, depending strongly on sectoral considerations. To our knowledge, our study is the first of its kind to use online/offline activity of the entire internet to infer social science insights, demonstrating the unparalleled potential of the internet as a social data-science platform. |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1701.05632&r=pay |
| By: | Aydın, Tolga; Aydın, Gülşen |
| Abstract: | his interdisciplinary study is concerned with testing the effectiveness of Modernization Theory in explaining regime change by means of data mining techniques. Modernization Theory, which links democratization with economic development (improvements in income, urbanization, industrialization, education and communication levels), has been criticized widely. Many criticisms posited that there is not a significant relation between economic development and democratization. This study is an attempt to test whether the theory has improved its effectiveness with the advent of the Internet and mobile phone technologies. To this end, first, the variables are introduced. Then, the study makes an analysis by using data mining techniques. It first tests the correlation between democratization and improvements in income, education, urbanization and communication levels within the period between 1976 and 1995. Then it adds the new variables, the Internet and mobile phone usage, and tests the correlation between democratization and this new range of variables for 1996-2015 period. In the conclusion, the study evaluates whether the effectiveness of Modernization Theory is improved when the Internet and mobile phone usage are added as the new variables. It is found that there is not a strong relation between income per capita and democratization as some critics of the Modernization Theory suggest, but other factors emphasized by this theory like improvements in education and communication have a more decisive effect. Moreover, among our new variables, Internet usage proved to be a really important variable conducive to democratization according to test results. |
| Keywords: | Employing Data Mining Techniques in Testing the Effectiveness of Modernization Theory |
| JEL: | O10 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:76315&r=pay |
| By: | Waknis, Parag |
| Abstract: | On November 8, 2017, the Prime Minister of India Narendra Modi declared currency denominations of Rs.500 and Rs.1000 to be illegal for use in transactions. These currency denominations together constituted almost 85% of total currency in circulation according to some estimates. Based on essentiality of money, and a segmented markets model perspective, I analyze the effects of this surprise demonetisation policy on the Indian economy. |
| Keywords: | demonetisation, essentiality of money, segmented markets, informal economy. |
| JEL: | E42 E51 E52 |
| Date: | 2017–01–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:76391&r=pay |
| By: | Mikel Bedayo (Banco de España) |
| Abstract: | Firms’ incentives to join up with other firms to apply collectively for a single loan are studied empirically in this paper. When several firms make a joint application for a single loan an association of firms is created. We identify the associations that had access to credit in Belgium over the period 2001-2011 and the firms that made up each association, observing the amount of credit that both the firms and the associations obtained from each financial institution they used. We analyse the amount of credit obtained by firms according to whether or not they belonged to an association, the likelihood of firms forming associations, the impact of belonging to an association on the amount of credit firms receive from banks and the effect of firms not obtaining any direct credit on the amount obtained by the associations formed by such firms. We also analyse whether associations formed by common-ownership firms are able to access more credit than other associations. We find that large and long-established firms are more likely to join up with other firms to make joint loan applications and that associations obtain more credit if all their members use the same bank as the association does to obtain credit. Furthermore, the lower a firm’s credit over the previous year, the more likely it is to form an association to obtain credit, and we show that associations comprising small firms with no credit history are especially credit constrained. |
| Keywords: | associations, finance, access to credit, relationship banking, Belgium |
| JEL: | G21 G30 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1704&r=pay |
| By: | Tatsuo Tanaka (Faculty of Economics, Keio University) |
| Abstract: | In this study, the effects of internet book piracy in the case of the Japanese comic book market were examined using direct measurement of product level piracy ratio and a massive deletion project as a natural experiment. Panel regression and difference-in-difference analysis consistently indicated that the effect of piracy is heterogeneous: piracy decreased the legitimate sales of ongoing comics, whereas the legitimate sales of completed comics increased. The latter result is interpreted as follows: piracy reminds consumers of past comics and stimulates sales in that market. |
| Keywords: | copyright, piracy, e-book, difference-in-difference, comic |
| JEL: | D12 L82 M3 O34 |
| Date: | 2016–12–29 |
| URL: | http://d.repec.org/n?u=RePEc:keo:dpaper:2016-027&r=pay |
| By: | Benito Arruñada |
| Abstract: | The contractual, single-exchange framework in Coase (1960) contains the implicit assumption that exchange in property rights does not affect future transaction (i.e., trading) costs. This is pertinent for analyzing use externalities but limits our understanding of property institutions: a central problem of property markets lies in the interaction among multiple transactions, which causes exchange-related and non-contractible externalities. By retaining a single-exchange simplification, the economic analysis of property has encouraged views that: (1) overemphasize the initial allocation of property rights, while some form of recurrent allocation is often needed; (2) pay scant attention to legal rights, although these determine enforceability and, therefore, economic value; and (3) overestimate the power of unregulated private ordering, despite its inability to protect third parties. These three biases have been misleading policy in many areas, including land titling and business firm formalization. |
| Keywords: | property rights, externalities, enforcement, transaction costs, public ordering, private ordering, impersonal exchange, organized markets, blockchain. |
| JEL: | D23 K11 K12 L85 G38 H41 O17 P48 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1547&r=pay |