nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2017‒02‒12
nine papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. Research and Impacts of Digital Financial Services By Karlan, Dean; Kendall, Jake; Mann, Rebecca; Pande, Rohini; Suri, Tavneet; Zinman, Jonathan
  2. Digital Music Industry - Background Synthesis By Sellin, Derek; Seppälä, Timo
  3. Blockchain: A Primer By Dwyer, Gerald P
  4. JRC Insights - Social Policy Innovation Series - Leveraging Digital Social Innovation: Perspectives from the IESI Knowledge Map By Gianluca Misuraca; Giulio Pasi; Dimitri Gagliardi; Fabienne Abadie
  5. The Economics of Zero-Rating and Net Neutrality By SOMOGYI, Robert
  6. Les monnaies virtuelles décentralisées sont-elles des outils d’avenir ? By Ariane TICHIT; Pascal LAFOURCADE; Vincent MAZENOD
  7. Demonetization and Its Impact on Employment in India By Pawan Kumar
  8. Is "Fintech" Good for Small Business Borrowers? Impacts on Firm Growth and Customer Satisfaction By Schweitzer, Mark E.; Barkely, Brett
  9. Industries without smokestacks: Telecommunication and ICT-based services trade By Cláudio R. Frischtak

  1. By: Karlan, Dean (Yale University); Kendall, Jake (Caribou Digital); Mann, Rebecca (Bill and Melinda Gates Foundation); Pande, Rohini (Harvard University); Suri, Tavneet (MIT); Zinman, Jonathan (Dartmouth College)
    Abstract: A growing body of rigorous research shows that financial services innovations can have important positive impacts on wellbeing, but also that many do not. We first describe the latest evidence on what works in financial inclusion. Second, we summarize research on key financial market failures and on products and innovations that address specific mechanisms underlying them. We conclude by highlighting open areas for future work.
    Date: 2016–09
  2. By: Sellin, Derek; Seppälä, Timo
    Abstract: After 15 years of decline, music industry revenues appear finally to have turned a corner with the growth of paid streaming services. However, the industry as a whole may not be equipped to handle the changes brought on by new technology: with affordable home recording equipment, independent artists can release music directly to online platforms; with streaming services, massive per-play consumption reports are generated daily; and with low artist payments reflecting consumer expectations that music should be free, there is growing pressure for the industry to be more transparent with royalty calculations and faster with their payments. In this paper, we describe the state of the global music industry today, and present historical and systemic factors which have led to the industry’s lack of transparency and complexity. We summarize the primary copyrights and licenses involved in music, and present a simplified value web as a basis for future research into possible global solutions. We identify three process layers for infrastructure related to managing assets, rights, reporting, and payments, regardless of physical format: (1) rights ownership, (2) consumption data, and (3) payment systems. Focusing on rights ownership, we summarize the major issues with today’s infrastructure, metadata, and protocols, highlighting causes for industry “black boxes,” the blockages in the system causing creators’ royalty payments to get stuck in the system. Finally, we look at past collaborative initiatives, primarily the Global Repertoire Database (GRD), in order to gain key learnings, and we acknowledge nascent blockchain-related efforts. With the digital music industry thus synthesized, we outline further research to arrive at a future industry architecture and to understand the impacts of the likely music supply chain transformation, and the related managerial implications.
    Keywords: Digital platforms, music industry, value web, global rights database, black boxes, metadata, blockchain
    Date: 2017–02–06
  3. By: Dwyer, Gerald P
    Abstract: The Bitcoin blockchain is the primary innovation in Bitcoin that makes it practical. Blockchains have applications in many contexts other than cryptocurrencies. This note is an introduction to blockchains that requires no prior knowledge, including of Bitcoin. Blockchains are ledgers of transactions kept by a set of participants, none of which is accorded special status as the “correct one.” Instead, agreement is reached by a process of consensus. I show how this works for Bitcoin, discuss applications in many alternative settings and provide some detail about a very different proof-of-concept application of blockchains by the Japan Exchange Group.
    Keywords: Blockchain, public distributed ledger, Bitcoin
    JEL: G10 G18 G21 G23 G28
    Date: 2016–12
  4. By: Gianluca Misuraca (European Commission – JRC); Giulio Pasi (European Commission – JRC); Dimitri Gagliardi; Fabienne Abadie (European Commission – JRC)
    Abstract: This issue of the ‘JRC Insights’ discusses how ICT-enabled social innovation initiatives that promote social investment through integrated approaches to social services delivery can contribute to the policy objectives of the EU Social Investment Package. Digitally-enhanced social service delivery can promote social investment. ICTs often play a game-changing role in the development of platforms that support innovative partnerships. Here, social challenges can be addressed by focusing on two objectives: (i) the modernisation of social protection systems in the EU Member States and, (ii) promoting experimental approaches to innovation-driven social investments. Modernisation and experimentation in social protection systems has been revived by the emergence of a new type of business, private or not for profit, in the field of social services. These businesses explore or even co-create innovative financial instruments. In particular, evidence gathered shows that ICT-enabled social innovation initiatives respond to the social needs of society or specific groups in society by facilitating co-creation and co-production processes. These processes enrich policy design with stakeholders' specific knowledge and competencies. ICT-enabled social innovation initiatives have the capacity to identify emerging or unmet needs, engage stakeholders and turn their governance models into sustainable production processes. This aspect makes their contributions to social investment approaches particularly apt.
    Keywords: Social investment, social policy innovation, SIP, Social Investment Package, social economy, social enterprise, ICT enabled social innovation, ICT, services, social protection, social welfare
    Date: 2017–01
  5. By: SOMOGYI, Robert (Université catholique de Louvain, CORE, Belgium)
    Abstract: This paper studies zero-rating, an emerging business practice consisting in a mobile internet service provider (ISP) excluding the data generated by certain content providers (CPs) from its consumers' monthly data cap. Being at odds with the principle of net neutrality, these arrangements have recently attracted regulatory scrutiny all over the word. I analyze zero-rating incentives of a monopolistic ISP facing a capacity constraint in a two-sided market where consumption provides utility for homogeneous consumers as well as advertising revenue for CPs. Focusing on a market with two CPs competing with each other and all other content which is never zero-rated, I identify parameter regions in which zero, one or two CPs are zero-rated. Surprisingly, the ISP may zero rate content when content is either very unattractive or very attractive for consumers, but not in the intermediary region. I show that zero-rating harms consumers if content is unattractive, whereas it improves social welfare in the case of attractive content.
    Keywords: Zero-rating; Sponsored Data; Net Neutrality; Data Cap; Capacity Constraint
    JEL: D21 L12 L51 L96
    Date: 2016–12–31
  6. By: Ariane TICHIT (Centre d'Etudes et de Recherches sur le Développement International(CERDI)); Pascal LAFOURCADE; Vincent MAZENOD (Centre d'Etudes et de Recherches sur le Développement International(CERDI))
    Abstract: In this article, we show that decentralized virtual currencies can be powerful tools for societal transformation. Indeed, the study of the joint and disjoint elements between the first Bitcoin currencies, SELs and local currencies, reveals that these projects are not so far. Then, we present the current evolution of crypto-currencies towards new energy aware, community-based, useful and fundamentally innovative protocols, emphazing their strong potential. Finally, some recent crypto-currencies are close to the values of the Social and Solidarity Economy, and even though they have some technical and theoretical problems, they have the merit of offering new perspectives. Finally, we propose an idea of decentralized money geolocalized melty, which would allow us to meet a certain number of limits that are experienced by traditional local currencies.
    Keywords: Decentralized virtual currencies, Crypto-currencies, LETs, Social currencies, Monetary innovations.
    JEL: G23 E51 E42
    Date: 2017–02
  7. By: Pawan Kumar
    Abstract: On November 08, the sudden announcement to demonetization the high denomination currency notes sent tremors all across the country. Given the timing, and socioeconomic and political repercussions of the decision, many termed it a financial emergency. Given high proportion of these notes in circulation, over 86 percent, it led to most economic activities, particularly employment, affected in a big way. Political parties, however, seemed divided on the issue, i.e. those in favor of the decision feel it will help to curb the galloping size of black money, fake currency, cross boarder terrorism, etc. In sharp contrast, the others believe it is a purely misleading, decision, based on no or poor understanding of black economy, and hence is only politically motivated in wake of the assembly elections due in a couple of states.
    Date: 2017–02
  8. By: Schweitzer, Mark E. (Federal Reserve Bank of Cleveland); Barkely, Brett (Federal Reserve Bank of Cleveland)
    Abstract: “Fintech” is a rapidly expanding segment of the financial market that is receiving much attention from investors and increasing regulatory scrutiny. While the attention is rising, very little is known about the performance of these lending sources on the outcomes of small businesses that make use of them. The Federal Reserve’s 2015 Small Business Credit Survey has data on the experiences of business owners with this new funding source and can provide some useful insights into this expanding sector, if compositional differences among the businesses that get bank loans, those that get fintech loans, and those that are denied credit are accounted for. We apply an inverse-probability-weighted regression adjustment and inverse-probability weighting from the treatment effects literature to adjust for compositional difference. We find: (1) online borrowers have characteristics that make them very much like the businesses who were denied credit, (2) the results for online lenders are hard to distinguish from either receiving no financing or receiving a bank loan, and (3) bank borrowers are more satisfied than online borrowers who are more satisfied than businesses who were denied credit. These results should inform the policy discussion on fintech and point to the need for clearer results on the effectiveness of online lenders to small businesses.
    Keywords: Small business lending; online alternative lenders; fintech; firm growth;
    JEL: C31 G21 G23 G28
    Date: 2017–02–02
  9. By: Cláudio R. Frischtak
    Abstract: This paper provides a basic understanding of the nature of emerging key information and communication technologies, and establishes the distance of countries from high-quality access to the internet—the necessary threshold one needs to cross in order to make use of such technologies. The paper underlines the importance of governments creating a more open and competitive environment to attract infrastructure investment (in terms of fibre-optic rings and cable links, among others), and foster rivalry among suppliers of devices and mainly services, thereby benefiting users with lower prices and better-quality services so as to steer societies away from being marginalized by the information and communication technology revolution.
    Keywords: economic development, innovation, least developed country, technological change, growth
    Date: 2017

This nep-pay issue is ©2017 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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