nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2017‒03‒12
fifteen papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. Liberation technology: mobile phones and political mobilisation in Africa By Marco Manacorda; Andrea Tesei
  2. Mobile telephony in emerging markets By Göller, Daniel; Andersson, Kjetil; Hansen, Bkørn
  3. Central Bank Digital Currencies: assessing implementation possibilities and impacts By Olga Gouveia; Enestor Dos Santos; Santiago Fernández de Lis; Alejandro Neut; Javier Sebastián
  4. Survey shortcuts? Evidence from a payment diary survey By Lola Hernandez; Robbert-Jan 't Hoen; Juanita Raat
  5. An economic review of the collaborative economy By Georgios Petropoulos
  6. Success Breeds Success: Weight Loss Dynamics in the Presence of Short-Term and Long-Term Goals By Kosuke Uetake; Nathan Yang
  7. Dynamics in Platform Ecosystems By Thies, Ferdinand
  8. Do consumers rely more heavily on credit cards while unemployed? By Cole, Allison
  9. Eco‐systems for young digital innovators By Reinhilde Veugelers
  10. Risk aversion and wealth: evidence from person-to-person lending portfolios By Daniel Paravisini; Veronica Rappoport; Enrichetta Ravina
  11. The Impact of ICT and E-Commerce Activities on Employment in Europe By Biagi, Federico; Falk, Martin
  12. The E-Monetary Theory By Ngotran, Duong
  13. Innovation, Technology, and the Payments System : a speech at Blockchain: The Future of Finance and Capital Markets?, The Yale Law School Center for the Study of Corporate Law, New Haven, Connecticut, March 3, 2017. By Powell, Jerome H.
  14. DiGiX: The Digitization Index By Noelia Cámara; David Tuesta
  15. Community through digital connectivity? Communication infrastructure in multicultural London: final report By Myria Georgiou; Wallis Motta; Sonia Livingstone

  1. By: Marco Manacorda; Andrea Tesei
    Abstract: Digital technologies have been widely used for political activism in recent years. In the first systematic test of their role as catalysts for political participation, Marco Manacorda and Andrea Tesei find that the growing use of mobile phones in Africa leads to more protests during recessions and periods of national crisis.
    Keywords: protests, politics, Africa, mobile phones
    JEL: D74 F50 O55 L96
    Date: 2017–03
  2. By: Göller, Daniel; Andersson, Kjetil; Hansen, Bkørn
    Abstract: Rapidly increasing sales of multi-SIM phones, mobile penetration rates above 100% and reported customer behavior all point to the fact that a significant share of mobile customers in emerging markets tend to use more than one SIM card. A primary motive for this is to avoid making expensive off-net calls. We add a segment of flexible prepaid customers, who choose to "multi-sim" in equilibrium to the seminal model of competing telephone networks a la Laffont, Rey and Tirole (1998b). In equilibrium, the networks choose to set a very high prepaid off-net price to achieve segmentation. This incentive prevails, even if termination rates are set to marginal costs.
    JEL: D43 L13 L96
    Date: 2016
  3. By: Olga Gouveia; Enestor Dos Santos; Santiago Fernández de Lis; Alejandro Neut; Javier Sebastián
    Abstract: Distributed ledgers are a technology that can support a digitized version of cash while potentially withholding its four major features: universality, anonymity, peer-to-peer exchangeability (P2P) and a constant nominal value.
    Keywords: Banks , Digital economy , Global , Working Paper
    JEL: E42 E50 E61 G20 O33
    Date: 2017–03
  4. By: Lola Hernandez; Robbert-Jan 't Hoen; Juanita Raat
    Abstract: In this paper we examine the presence of panel conditioning in a payment diary survey studying the payment behavior of Dutch consumers. We analyze whether the reporting behavior of frequent participants in the payment survey systematically differs from that of less-frequent survey participants. We introduce refreshment groups that allow us to compare the reporting behavior of 'trained' and 'fresh' respondents, where the differences between reported values are used as a proxy for the panel conditioning effect. We find no consistent significant differences for the number and value of cash and debit card payments between trained and fresh respondents, for any demographic group, sector or transaction size. Likewise we find no consistent significant differences for the value of cash withdrawals between trained and fresh respondents. However we do find some signs of panel conditioning in the reported number of cash withdrawals
    Keywords: payment behavior; diary studies; survey design; panel conditioning
    JEL: C81 C93 D12
    Date: 2017–02
  5. By: Georgios Petropoulos
    Abstract: The collaborative economy matches people online who want to share assets and services. This Policy Contribution - i) discusses how the collaborative economy can be defined; ii) provides an overview of evidence about its potential benefits for European economies and the impact of specific platforms in the sectors of their operation; iii) illustrates the criteria that enable professional and non-professional services offered through collaborative platforms to be distinguished; iv) recommends priorities for the platforms so that they can create a safe and transparent environment for the transactions of their users; v) discusses further regulatory concerns and how they should be approached. The collaborative economy is characterised by a great variety of business models. It spans multiple sectors each of which has its own market characteristics. A single definition is therefore beyond reach. However, a common element in the majority of business models is the use of under-utilised assets for the extraction of economic benefits. There is evidence that Europe could enjoy major economic gains from the collaborative economy, especially if barriers are removed and the regulatory framework is adjusted to better accommodate platforms. However, in particular sectors such as ride-sharing and short-term accommodation, the benefits from the operation of platforms come at a cost because platforms can have a detrimental effect on ‘traditional’ incumbent operators. The technology is thus disruptive to many traditional businesses. While under EU legislation it is not clear when services supplied through collaborative platforms can be classified as professional, a careful examination of business models on a case-by-case basis can help to define some relevant criteria. The frequency with which a service is provided, the provider’s motive and the associated remuneration are three important aspects that enable professional and non-professional services to be distinguished. As intermediaries, collaborative platforms have access to a large volume of information about the market and about their users, which is not available to other market participants or the regulator. Consumer protection requires a safe and transparent environment for transactions. Platforms based on their market position could be very helpful with this respect. Legal certainty and regulatory clarity are also required to incentivise further investment in efficient information technologies and platforms. The current uncertainty over the status of the collaborative economy platforms, legal disputes in national and European courts and decisions to restrict the operation of platforms at local/city levels create an environment in which it is difficult to attract new investment in Europe. Regulatory authorities should move quickly to define the framework of the operation of such platforms to restore investors’ confidence. Local regulation is very important for defining the operational framework of collaborative platforms that can bring the greatest benefits to local economies. But an EU-wide approach is also needed to define the general framework of the operation of these platforms and to address in a decisive and clear way the associated regulatory concerns
    Date: 2017–02
  6. By: Kosuke Uetake; Nathan Yang
    Abstract: We investigate the role of short-term goal achievement on long-term goal achievement under the context of weight loss. Using unique and large-scale data from a freemium mobile weight management application (Lose It!), we track the daily dynamics of weight loss across a large number of users. The application sets a salient daily budget for calories, and by comparing cases in which the user is slightly under or over-budget, we provide a causal link between short-term goal achievement and long-term outcomes such as future weight loss, achievement of goal weight, and setting of more ambitious weight loss targets. Short-term goal achievement also have implications on future customer development as staying within the daily budget leads to an increase in premium account upgrades. Furthermore, we show that the impact of short-term goal achievement varies across user segments. We later demonstrate using a dynamic regression discontinuity design that the short-term goal achievement effects persist over time, and in fact, induce users to accomplish even more ambitious short-term goals in the future. Finally, estimates from a dynamic structural model of calories management reveal that users receive positive utility from past short-term goal accomplishments, and counterfactual analysis with the estimated model quantify the long-run user benefits of various hypothetical policies that adjust the daily budget of calories.
    Keywords: big data, customer development, customer relationship management, dynamic structural model, freemium, goal achievement, healthy living, mobile application, motivation, regression discontinuity, self control, weight management
    Date: 2017–03
  7. By: Thies, Ferdinand
    Abstract: Platform business models are gaining rapid traction in today’s world. As of 2016, the four most valuable companies—Apple, Google, Amazon and Microsoft—have been using this business model. So do some of the most promising start-ups, including Uber and AirBnB. These providers of multi-sided platforms have a common goal, which is to match producers and consumers in order to create value through their interactions. The evolving ecosystems around a platform business are characterized by network effects among the groups of stakeholders, as each market side is influenced by the other side of the platform. A goal of the platform owner is to create and exploit as many monetization opportunities as possible. As the main revenue source, usually, is based on the interactions on or access to the platform, managing the demand and the supply side is at the core of platform management. One example of an uprising area of business that leverages a platform business model is crowdfunding platforms. These multi-sided markets try to facilitate the interaction of individuals who seek funding for a specific project, with a crowd of people that is willing to invest in the idea. The idea behind the model has been around for a long time, but due to reduced transaction cost is now available on a global scale. As of November 2016, Kickstarter, one of the most famous players in the business of reward-based crowdfunding, has already raised 2.7 billion USD in total pledges and has funded over 114,000 projects. This dissertation tries to shed light on the dynamics that are at work in a platform ecosystem by investigating distinct behaviors of platform participants and observing the impact on other stakeholders and the platform ecosystem as a whole. Each of the papers included in this dissertation focuses on a certain participant or dynamic of the platform ecosystem. With the first article, the theoretical basis of asymmetric information between consumers and producers in a crowdfunding environment is established. Furthermore, it shows that the opinion expressed in the form of electronic Word-of-Mouth (eWOM) and the observable popularity information (e.g. decision-making of other participants) serve as credible quality signals, subsequently influencing consumers’ decision-making. Also, popularity information and eWOM differ significantly in terms of effectiveness over time. Both factors, eWOM and popularity information, can therefore be seen as means to reduce information asymmetries in platform ecosystems. Since the importance of popularity information and eWOM is known to producers, an incentive to manipulate these performance indicators can be deducted. We therefore suspected that producers might establish non-genuine indicators of eWOM or popularity information. Article 2 then identifies a manipulation strategy of project creators on Kickstarter, who illegally alter the number of Facebook Shares their campaign supposedly has. After identifying the fraudulent campaigns, we were able to observe the resulting effects of non-genuine social information on consumer decision-making over time, showing that a short-term gain can be achieved, whereas the total effect is indeed harmful to the campaign. Contrary to the deliberately fake social information sent by the producers, the third article then concerns non-explicit campaign characteristics in the form of personality traits of producers. Here we were able to extract the Big Five personality traits of a project creator from the campaign description and the included video and to analyze their effectiveness for influencing potential consumers. The influence was measured by means of project adoption by the crowd and diffusion on Facebook. Finally, article 4 investigates a governance decision made by the platform provider. Under the condition of a natural experiment, we were able to observe and analyze how a policy change by the platform owner with regard to their gatekeeping strategy can influence a platform ecosystem as a whole, as well as certain participants in particular. The policy change, made by Kickstarter in 2014, lowered the barrier for entering the platform for pro-ject creators, resulting in a shift in average quality, number of projects and platform revenue. Implications for future research and practice are discussed in depth for each article and summarized in the final chapter.
    Date: 2017
  8. By: Cole, Allison (Federal Reserve Bank of Boston)
    Abstract: Leading up to the Great Recession, households increased their credit card debt by over 16 percent ($121 billion) during the five-year period from 2004 to 2009. The unemployment rate simultaneously began to rise in 2008, increasing from 5.0 percent in January 2008 to a high of 10.0 percent in October of 2009. During the recovery, from 2009 to 2014, credit card debt fell by more than 25 percent, as the unemployment rate returned to near prerecession levels. These coincident developments have led to speculation that consumers facing unemployment or job uncertainty may have increased their reliance on credit cards.
    Keywords: Consumer payment choice; consumer behavior; unemployment; credit cards; consumer preferences; Survey of Consumer Payment Choice
    JEL: D12 D91 J6
    Date: 2016–12–20
  9. By: Reinhilde Veugelers
    Abstract: This contribution takes a closer look at innovation in ICT sectors and the failing ability of young innovative firms in Europe to grow into leading world innovators in these sectors. The analysis suggests that Europe might be missing strong digital regional clusters with a symbiotic relationship between young ICT innovators and incumbent ICT leading companies.
    Keywords: Young digital innovators, eco‐systems, regional clusters
    Date: 2017–03–02
  10. By: Daniel Paravisini; Veronica Rappoport; Enrichetta Ravina
    Abstract: We estimate risk aversion from the actual financial decisions of 2,168 investors in Lending Club (LC), a person-to-person lending platform. We develop a methodology that allows us to estimate risk aversion parameters from each portfolio choice. Since the same individual makes repeated investments, we are able to construct a panel of risk aversion parameters that we use to disentangle heterogeneity in attitudes towards risk from the elasticity of investor-specific risk aversion to changes in wealth. In the cross section, we find that wealthier investors are more risk averse. Using changes in house prices as a source of variation, we find that investors become more risk averse after a negative wealth shock. These preferences consistently extrapolate to other investor decisions within LC.
    Keywords: risk aversion; portfolio choice; crowdfunding
    JEL: D12 D14 E21 G11
    Date: 2016–02–29
  11. By: Biagi, Federico (European Commission, Joint Research Centre (JRC), Directorate Growth & Innovation, Human Capital and Employment Unit and University of Padua, Italy); Falk, Martin (Austrian Institute of Economic Research (WIFO))
    Abstract: This study presents new empirical evidence regarding the impact of ICT/e-commerce activities on labour demand. The data is based on new and unique data for 10 European countries for the period 2002-2010. A key feature of the empirical analysis is the use of several types of advanced ICT activities, such as enterprise resource planning (ERP) systems,mobile internet access, and e-commerce practices. The main result of the study is that the increase in ICT/e-commerce activities over time has not led to a decline in jobs. This holds true for both manufacturing and service industries, as well as for SMEs and large firms. For ERP systems and websites, there is some evidence of positive effects. These findings do not support the hypothesis that ICT utilization is leading to labour substitution overall. In fact, ICT activities appear to be rather neutral to employment. The results are robust not only to the model specification, but also the estimation method applied.
    Keywords: labour demand; information and communication technologies; e-commerce activities
    JEL: J23 O33
    Date: 2017–02–01
  12. By: Ngotran, Duong
    Abstract: Using the sparse grid, we solve a DSGE model where there are two types of electronic money: reserves (e-money that is issued by the central bank for banks) and zero maturity deposits (e-money that is issued by banks). Transactions between bankers are settled by reserves, while transactions in the non-bank private sector are settled by zero maturity deposits. We use our model to discuss about unconventional monetary policy tools during the Great Recession. Due to the maturity mismatch between deposits and loans, we find that keeping the federal funds rate at the lower bound for a long but finite time stimulates the economy in the short run but creates deflation and lower outputs in the long run. To get out of the zero lower bound, the central bank can conduct helicopter money and increase the interest rate paid on reserves simultaneously, which is impossible in the Keynesian theory, but possible with the current electronic money system.
    Keywords: e-money, reserves, quantitative easing, zero lower bound, interest on reserves, helicopter money
    JEL: E4 E40
    Date: 2016–10–29
  13. By: Powell, Jerome H. (Board of Governors of the Federal Reserve System (U.S.))
    Date: 2017–03–03
  14. By: Noelia Cámara; David Tuesta
    Abstract: The Digitization Index (DiGiX) assesses the factors, agents’ behavior and institutions that enable a country to fully leverage Information and Communication Technologies (ICTs) for increased competitiveness and well-being. It is a composite index that summarizes relevant indicators on 100 countries’ digital performance.
    Keywords: Digital economy , Financial Inclusion , Global , Working Paper
    JEL: C43 O3
    Date: 2017–02
  15. By: Myria Georgiou; Wallis Motta; Sonia Livingstone
    Abstract: This project, supported by an LSE Seed grant, examines the role that communication plays in promoting and hindering community among London’s diverse populations. While symbolic and structural resources such as education, local institutions and property have been systematically studied as community-building resources, communication infrastructures are little studied and their potential as a community asset largely unrecognised. Yet with over half of the world population now inhabiting cities (UN 2010), how people communicate across or withdraw from difference in urban societies matters greatly. For London, the most culturally diverse city in the world and one of the most connected (Massey 2005), these questions are pressing. How does London’s rich communication infrastructure enable Londoners to communicate with each other? Does this in turn contribute to social capital and building community? Or does it segregate people across cultural and generational lines? By focusing on a highly culturally diverse part of London – Harringay, North London – this study examines the role of communication infrastructure in bridging, bonding and separating the different groups occupying the same locale. It focuses on communication assets – the resources that enhance urban dwellers’ social capital, sense of belonging and mutual understanding. Its main research question is: In what ways does communication infrastructure mobilise Haringey’s diverse population in building social capital and community? Conceptually, we juxtapose the original theory of communication infrastructure developed by Ball-Rokeach and her research team under the Metamorphosis project with Bourdieu’s social capital. The communication infrastructure theory takes an ecological approach to understanding the role of communication of all kinds in promoting or undermining belonging, civic engagement and collective efficacy (Ball-Rokeach, Kim and Matei, 2001; Kim and Ball-Rokeach, 2006). We explore this theory alongside and vis-à-vis Bourdieu’s (1985, 1992) conception of social capital as the sum of resources that accrue to the possession of durable networks of sustained (institutionalised) relations and recognition. These approaches provide interesting parallels in how practices of communication and sociability support groups’ efforts to gain access to resources that will advance their symbolic and material power. Our particular focus is on how different local groups mobilise knowledge and information resources for work, education, health and leisure. The project adopts a multi-method approach, which includes creative and participatory tools for data collection, locale mapping and community sharing alongside established methods in social sciences.
    JEL: L91 L96
    Date: 2016

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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.