nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2017‒02‒05
ten papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. Supercell Joins a Mobile Internet Giant: Fitting into Tencent’s Overall Business Strategy By Jia, Kai; Kenney, Martin; Seppälä, Timo
  2. Political Determinants of Competition in the Mobile Telecommunication Industry By Faccio, Mara; Zingales, Luigi
  3. Effective marketing of mobile telecom services through brand personality: Empirical evidence from Greece By Niros, Meletios; Pollalis, Yannis; Niros, Angelica
  4. Will Ad Blocking Break the Internet? By Ben Shiller; Joel Waldfogel; Johnny Ryan
  5. Blockchain's Struggle to Deliver Impersonal Exchange By Benito Arruñada
  6. The ZEW ICT survey 2002 to 2015: Measuring the digital transformation in German firms By Bertschek, Irene; Ohnemus, Jörg; Viete, Steffen
  7. Banking Crises and the Performance of MIFs By Rui, Chen; Hartarska, Valentina
  8. Not for everyone: Personality, mental health, and the use of online social networks By Howley, P.; Boyce, C.;
  9. Social Media and Fake News in the 2016 Election By Hunt Allcott; Matthew Gentzkow
  10. Nowcasting using news topics Big Data versus big bank By Leif Anders Thorsrud

  1. By: Jia, Kai; Kenney, Martin; Seppälä, Timo
    Abstract: On June 21, 2016, Tencent, the Chinese mobile internet giant spent $8.6 billion to purchase 84.3% stock of Supercell, the wildly profitable Finnish firm behind hit games Hay Day, Clash of Clans, Boom Beach and Clash Royale. This was Tencent’s largest oversea deal ever. While it has bought other gaming firms including the one in 2015 e.g. Riot, the maker of the online battle game “League of Legends,” this acquisition is far larger. As most analysts have assumed, given Tencent’s long-standing dependence on game revenue in PC era, at one level, this deal indicates the continuing importance of games to Tencent strategy. However, this misses the important fact that in Chinese market, Tencent’s true customer acquisition strategy is centralized around QQ, which is its PC chat platform, and WeChat, the smartphone chat platform, and its increasingly important e-payment system. Tencent today is no longer a game company and not even a simple chat-based social network. We suggest that Tencent is developing a “platform business group” (PBG) model based strategy as many other Chinese firms. The PBG model exploits synergies created by linking the constituent businesses to cross-market services. To demonstrate, we briefly explain its PBG model, and Tencent’s transformation from an online gaming company into a PBG. In addition, we explore the reasons why Tencent bought Supercell and explain their possible scenarios for future business strategies.
    Date: 2017–01–31
  2. By: Faccio, Mara; Zingales, Luigi
    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.
    Keywords: Antitrust; capture; political economy
    JEL: D72 L11 P16
    Date: 2017–01
  3. By: Niros, Meletios; Pollalis, Yannis; Niros, Angelica
    Abstract: The purpose of this research is to explore any relationship between brand personality and brand image in mobile telecom branded offerings. Furthermore, this paper explores brand image as an antecedent of both perceived quality and consumer behavior. A survey conducted using a “positivism” approach, in which 318 consumers participated through a face to face handing over. Sincerity, competence and sophistication proved to be dominant precursors of brand image. On the other hand, brand image suggests a basic aspect of perceived quality in intangible telecom branded offerings. Moreover, customer satisfaction concerns a mediating factor impacting the relationship between perceived quality and brand attachment. Thus, perceived quality does not guarantee brand attachment and customer satisfaction is the key to achieve that. Hence, fair pricing, low service access costs and consistent IMC are necessary tactics to build brand attachment. The latter, along with customer inertia lead to favorable WoM and customer loyalty. This project provides telecom brand managers with valuable know-how in order to design “out of the box” strategies and tactics.
    Keywords: Marketing & Advertising, Marketing, Consumer Behaviour, brand
    JEL: M31
    Date: 2017–01–30
  4. By: Ben Shiller; Joel Waldfogel; Johnny Ryan
    Abstract: Ad blockers allow Internet users to obtain information without generating ad revenue for site owners; and by 2016 they were used by roughly a quarter of site visitors. Given the ad-supported nature of much of the web, ad blocking poses a threat to site revenue and, if revenue losses undermine investment, a possible threat to consumers' access to appealing content. Using unique, proprietary, and site-specific data on the share of site visitors using ad blockers at a few thousand sites, along with Alexa traffic data, we explore the impact of ad blocker usage on site quality, as inferred from traffic ranks, 2013-2016. We find that each additional percentage point of site visitors using ad blockers raises (worsens) its traffic rank by about 0.6 percent over a 35 month period, with stronger effects at initially worse-ranked sites. We provide additional evidence of causality by showing that the relationship between traffic trends and eventual ad blocking does not predate ad blocking. Plausible instruments for ad blocking also deliver consistent results. Effects of ad blocking on revenue are compounded by the fact that ad blocking reduces visits, while also generating less revenue from remaining visitors employing ad blockers. We conclude that ad blocking poses a substantial threat to the ad-supported web.
    JEL: L81 L82
    Date: 2017–01
  5. By: Benito Arruñada
    Abstract: With its decentralized peer-to-peer structure, application of the blockchain technology underpinning Bitcoin holds the promise of making impersonal exchange possible for all types of old and new transactions in all types of markets. Such theoretical promise is examined here by identifying what value blockchain adds to the contractual process, exploring its contractual potential and analyzing the main difficulties it is facing. The article argues that blockchain applications will evolve towards dual structures separating causal and formal transactions. Complementarily and contrary to naive conceptions that proclaim the end of intermediaries and state involvement, such applications will rely on a variety of interface and enforcement specialists, including standard public interventions, especially for property transactions. Without these interventions, blockchain will at most work as an in personam—instead of as an in rem— system, therefore facilitating mere personal instead of impersonal transactions.
    Keywords: property rights, enforcement, transaction costs, impersonal exchange, blockchain, distributed ledgers.
    JEL: D23 K11 K12 L85 G38 H41 O17 P48
    Date: 2017–01
  6. By: Bertschek, Irene; Ohnemus, Jörg; Viete, Steffen
    Abstract: Modern Information and Communication Technologies (ICT) have been proliferating through the entire business sector over recent decades. This increasing digitalization is having a substantial impact on economic activity and is continuously changing the nature of production processes and our day-to-day working life. Since 2002, the ICT Survey carried out by the Centre for European Economic Research (ZEW) has tracked the diffusion and use of ICT in different industries within the German economy. Further surveys were conducted at irregular intervals in 2004, 2007, 2010 and 2015. The survey was designed by ZEW's Research Department Information and Communication Technologies. The data was collected via computer-assisted telephone interviews (CATI) by infas Institute for Applied Social Sciences. The central aim of the survey is twofold: Firstly, a representative picture of the use of ICT by German firms is obtained. Secondly, taking account of a large set of further firm characteristics it should allow an analysis of the consequences of employing ICT and ICT-related projects with respect to different measures of firm performance.
    Date: 2017
  7. By: Rui, Chen; Hartarska, Valentina
    Abstract: The global financial crisis that started in 2007 and 2008 affected financial markets across the world. In many countries, it was followed by local financial crises with severe consequences for marginalized borrowers such as micro and small businesses and consumers with already limited access to financial services. Such clients are typically served by Microfinance Institutions, which provide loans, savings and payment facilities to a target clientele. We study how the spread of the financial troubles resulting from the 2007-2008 crisis affected these MFIs institutions’ ability to achieve their double bottom line to remain financially sustainable and to reach as many marginalized clients as possible. Our data consist of 2,611 MFIs from 118 countries and is for the 1998-2011 period. We employ the fixed effect model with Difference in Difference (DID) specification and control for country and organization-specific characteristics. Results show that the global financial crisis had a negative impact on the ability of MFIs to serve many clients (measured by the number of active borrowers) but it had no negative impact on financial sustainability (measured by operational self-sufficiency and return on assets). This suggests that MFIs have dealt with the crises just like banks, namely restricting credit and serving fewer presumably larger borrowers.
    Keywords: microfinance institutions, financial crisis, financial system, outreach and sustainability, Industrial Organization, Institutional and Behavioral Economics, International Development,
    Date: 2017
  8. By: Howley, P.; Boyce, C.;
    Abstract: Much previous research has examined the relationship between online socialising and mental health, but conclusions are mixed and often contradictory. In this present paper we unpack the online social networking - mental health relationship by examining to what extent the relationship between these variables is personality-specific. Consistent with the idea that communicating through the internet is fundamentally different from face-to-face socializing, we find that on average, use of social networking web-sites is negatively associated with mental health. However, we find that the mental health response is dependent upon an individual’s underlying personality traits. Specifically, individuals who are either relatively extraverted or agreeable are not substantively affected from spending significant amounts of time on social networking web-sites. On the other hand, individuals who are relatively more neurotic or conscientiousness are much more likely to experience substantive reductions in their mental health from using social networking web-sites. We suggest that if the aim of public policy is to mitigate the adverse mental health effects from excessive internet use, then one-size-fits all measures will likely be misplaced. More generally, our research highlights the importance of conducting differentiated analyses of internet users when examining the health effects from internet use.
    Keywords: personality traits; psychological health; internet; social interaction;
    JEL: I10
    Date: 2017–01
  9. By: Hunt Allcott; Matthew Gentzkow
    Abstract: We present new evidence on the role of false stories circulated on social media prior to the 2016 US presidential election. Drawing on audience data, archives of fact-checking websites, and results from a new online survey, we find: (i) social media was an important but not dominant source of news in the run-up to the election, with 14 percent of Americans calling social media their “most important” source of election news; (ii) of the known false news stories that appeared in the three months before the election, those favoring Trump were shared a total of 30 million times on Facebook, while those favoring Clinton were shared eight million times; (iii) the average American saw and remembered 0.92 pro-Trump fake news stories and 0.23 pro-Clinton fake news stories, with just over half of those who recalled seeing fake news stories believing them; (iv) for fake news to have changed the outcome of the election, a single fake article would need to have had the same persuasive effect as 36 television campaign ads.
    JEL: C52 C53 D7 H0 J60
    Date: 2017–01
  10. By: Leif Anders Thorsrud
    Abstract: The agents in the economy use a plethora of high frequency information, including news media, to guide their actions and thereby shape aggregate economic fluctuations. Traditional nowcasting approches have to a relatively little degree made use of such information. In this paper, I show how unstructured textual information in a business newspaper can be decomposed into daily news topics and used to nowcast quarterly GDP growth. Compared with a big bank of experts, here represented by official central bank nowcasts and a state-of-the-art forecast combination system, the proposed methodology performs at times up to 15 percent better, and is especially competitive around important business cycle turning points. Moreover, if the statistical agency producing the GDP statistics itself had used the news-based methodology, it would have resulted in a less noisy revision process. Thus, news reduces noise.
    Keywords: Nowcasting, Dynamic Factor Model (DFM), Latent Dirichlet Allocation (LDA)
    Date: 2016–11

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