nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2017‒04‒30
sixteen papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. Mobile banking in Sub-Saharan Africa: setting the way towards financial development By Rouse, Marybeth; Verhoef, y Grietjie
  2. Looking Back On the Age of Checking in America, 1800-1960 By Jaremski, Matthew; Mathy, Gabrial
  3. The Rise of the Sharing Economy in Tourism: Exploring Airbnb Attributes for the Veneto Region By Jan Van der Borg; Nicola Camatti; Dario Bertocchi; Andrea Albarea
  4. Fintech, Regulatory Arbitrage, and the Rise of Shadow Banks By Greg Buchak; Gregor Matvos; Tomasz Piskorski; Amit Seru
  5. Prospects for information and communications technology-enabled services in Kenya: The case of the mobile money transfer industry By Dianah Ngui Muchai; Peter Kimuyu
  6. Network Causality Structures among Bitcoin and other Financial Assets: A Directed Acyclic Graph Approach By Qiang Ji; Elie Bouri; Rangan Gupta; David Roubaud
  7. Innovative Food Price Collection in Developing Countries. Focus on Crowdsourcing in Africa By Heidrun Zeug; Gunter Zeug; Conrad Bielski; Gloria Solano-Hermosilla; Robert M’barek
  8. Digitale Strategien für mehr Materialeffizienz in der Industrie: Ergebnisse aus dem IW-Zukunftspanel By Neligan, Adriana; Schmitz, Edgar
  9. Free digital learning opportunities for migrants and refugees: an analysis of current initiatives and recommendation for their use By Elizabeth Colucci; Hanne Smidt; Axelle Devaux; Charalambos Vrasidas; Malaz Safarjalani; Jonatan Castaño Muñoz
  10. 디지털경제의 진전과 산업혁신정책의 과제: 주요국 사례를 중심으로 (Digital Innovation and Policy Challenges: Focused on Major Countries’ Cases and Their Implications) By Kim , Jeong-Gon; Na , Seung Kwon; Jang , Jong-Moon; Lee , Sung Hee; No , Suyeon
  11. Digital Knowledge Generation and the Appropriability Trade-Off. By Antonelli, Cristiano
  12. Content acquisition by streaming platforms: premium vs. freemium By CARRONI Elias; PAOLINI Dimitri
  13. Platform play among incumbent firms: the wrong focus? By Nicolas van Zeebroeck; Jacques Bughin
  14. Younger Customers' Outlooks when Selecting and Changing a Financial Services Provider: The Case of Maltese Students By Camilleri, Silvio John; Ellul, Denise
  15. Child abuse materials as digital goods: Why we should fear new commercial forms By Acar, Kemal Veli
  16. Measuring Applicant Quality to Detect Discrimination In Peer-to-Peer Lending By Weizsäcker, Georg; Zankiewicz, Christian

  1. By: Rouse, Marybeth; Verhoef, y Grietjie
    Abstract: The importance of financial development for long-term economic growth has been recognised by policy-makers arounds the world. Fast growing economies with limited formal banking services experience greater financial exclusion. The explosion in mobile phone technology in Africa saw the rapid development of mobile banking. Many countries in Africa have poor retail banking network infrastructure especially in the rural areas. Mobile communication networks introduced innovative products to extend mobile banking into remote rural locations. The development of mobile banking has contributed towards enhanced financial inclusion in Sub-Saharan Africa (SSA). In less than ten years, Kenya has become the leading country in SSA for mobile banking penetration and mobile banking has been instrumental in providing access to financial services to the previously unbanked. This article surveys the state of economic development in Africa as contextualisation of subsequent trends in banking developments in SSA.
    Keywords: financial development, financial inclusion, mobile technology, retail banking, Sub-Saharan Africa (SSA)
    JEL: G21 O1 O3 O5
    Date: 2017–03
  2. By: Jaremski, Matthew; Mathy, Gabrial
    Abstract: The United States not only used bank checks the most but also clung to their use far longer than other developed nations. However, now in the twilight of the check, we trace the evolution of the checking system in the United States through its major phases from the founding of the nation through the modern period, including the rise of clearinghouses, the growth of the interbank clearing network, the Federal Reserve’s establishment of nation-wide central clearing, and the adoption of standardized magnetic imaging for easy processing of checks. Our empirical analysis examines the determinants of check clearing both at the aggregate and state-level in order to shed light on the nation’s dominant use of checks.
    Keywords: payment system, personal checks, banks, United States
    JEL: E42 G2 N14
    Date: 2017–03
  3. By: Jan Van der Borg (Department of Economics, University Of Venice Cà Foscari, and KU Leuven); Nicola Camatti (Department of Economics, University Of Venice Cà Foscari); Dario Bertocchi (IUAV University of Venice); Andrea Albarea (Department of Economics, University Of Venice Cà Foscari)
    Abstract: In just a couple of years, the sharing economy grew out to become a significant segment of the holiday accommodation market. Online peer-to-peer marketplaces allow people to offer rooms or entire houses to tourists, with Airbnb being the biggest and most famous example. This paper aims to give an insight into explaining which factors and attributes influence the success of Airbnb accommodations in the Veneto Region, using occupancy as a proxy. We analysed characteristics of 19624 Airbnb accommodations. The logistic regression model identifies a number of influential attributes which can be divided between locational characteristics, being located in attractive tourism destinations, and accommodation characteristics, for example the price, rating, number of previous bookings and the status of the host. The quantitative analysis allows to create an attractiveness scale, which is analysed for geographic patterns.
    Keywords: sharing economy, peer-to-peer marketplaces, Airbnb, attractiveness, tourism policy
    JEL: L83 O18 R58
    Date: 2017
  4. By: Greg Buchak; Gregor Matvos; Tomasz Piskorski; Amit Seru
    Abstract: We study the rise of fintech and non-fintech shadow banks in the residential lending market. The market share of shadow banks in the mortgage market has nearly tripled from 2007-2015. Shadow banks gained a larger market share among less creditworthy borrowers, with a tilt towards refinancing mortgages. Shadow banks were significantly more likely to enter markets where traditional banks faced more regulatory constraints. This suggests that traditional banks retreated from markets with a larger regulatory burden, and that shadow banks filled this gap. Fintech firms accounted for almost a third of shadow bank loan originations by 2015. To isolate the role of technology in the decline of traditional banking, we focus on technology differences between shadow banks, holding the regulatory differences between different lenders fixed. Analyzing fintech firms’ entry and pricing decisions, we find some evidence that fintech lenders possess technological advantages in determining corresponding interest rates. More importantly, the online origination technology appears to allow fintech lenders to originate loans with greater convenience for their borrowers. Among the borrowers most likely to value convenience, fintech lenders command an interest rate premium for their services. We use a simple model to decompose the relative contribution of technology and regulation to the rise of shadow banks. This simple quantitative assessment indicates that increasing regulatory burden faced by traditional banks and financial technology can account, respectively, for about 55% and 35% of the recent shadow bank growth.
    JEL: G2 L5
    Date: 2017–03
  5. By: Dianah Ngui Muchai; Peter Kimuyu
    Abstract: The mobile money transfer industry has been the most successful information and communications technology-enabled service in Kenya, having recorded an exponential growth relative to its neighbours within the East Africa region. This could be attributed to Kenya’s status as a leading commercial and logistics hub in the region, coupled with the competitive strengths of smaller regional peers such as Rwanda, providing a unique opportunity to expand the industry’s services and maximize the economies of scale required for its success and expansion. This can be achieved if Kenya identifies its market niche, generates investment prospects, and addresses the accompanying risks.
    Date: 2017
  6. By: Qiang Ji (Center for Energy and Environmental Policy Research, Institutes of Science and Development, Chinese Academy of Sciences, Beijing, China and School of Public Policy and Management, University of Chinese Academy of Sciences, Beijing, China.); Elie Bouri (USEK Business School, Holy Spirit University of Kaslik, Jounieh, Lebanon.); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa); David Roubaud (Montpellier Research in Management, Montpellier Business School, Montpellier, France.)
    Abstract: Unlike prior studies that have mostly relied on ad hoc network structures, we use a data-driven methodology, namely the directed acyclic graph (DAG), to uncover the contemporaneous and lagged causal relations among Bitcoin and a set of financial assets. The DAG methodology allows the identification of networks of causality based on the observed correlations and partial correlations approach, without making a priori causal assumptions. The main results indicate that the Bitcoin market is quite isolated, especially during its bull market state. We also conduct forecast error variance decompositions and show that the influence of different financial assets on Bitcoin up to the 20-day horizon does not account for more than 10% of innovations in all cases.
    Keywords: Bitcoin, financial assets, integration, causality, directed acyclic graph
    JEL: G11 G15
    Date: 2017–04
  7. By: Heidrun Zeug (Zeug Consulting (Miltenberg, Germany)); Gunter Zeug (Terranea UG (Burgstadt, Germany)); Conrad Bielski (EOXPLORE UG (Weil am Rhein, Germany)); Gloria Solano-Hermosilla (European Commission – JRC); Robert M’barek (European Commission – JRC)
    Abstract: Recent food crises have revealed the importance of timely and reliable food price information for food security monitoring and to support informed policy decision making. The increasing number of mobile phone users in Africa, combined with improved networks and broadband coverage, makes it increasingly possible to use mobile-based crowdsourcing to obtain accurate and up-to-date food price information. The use of mobile technologies also affords the possibility of reaching a large number of volunteers (crowd workers) in specific geographic locations, thus enhancing the available sets of information. This study provides a literature review of the concept of crowdsourcing and an overview and analysis of previous and on-going innovative food price collection initiatives in developing countries, particularly in Africa. Based on the research and interviews with relevant stakeholders, potential benefits and challenges have been identified and a set of recommendations has been drafted. The research shows that there is not a single crowdsourcing solution. The main challenges are encouraging crowd participation, and ensuring that data collected are trustworthy and of high quality, which in turn depends on offering the right incentives. Although the financial rewards offered to the crowd are often low, completely unpaid voluntary work is not common, which to some extent limits the potential cost advantage of crowdsourcing methods of data collection. New technologies empower people, and crowdsourcing might in future have potential to provide additional earnings and skills in poor communities, where skill development and ensuring access to technology are both potentials and challenges.
    Keywords: Crowdsourcing, food prices, Africa, mobile technologies
    Date: 2017–01
  8. By: Neligan, Adriana; Schmitz, Edgar
    Abstract: Diese Studie liefert auf Basis von Befragungsergebnissen aus dem IW-Zukunftspanel erstmalig Erkenntnisse zur Relevanz der Digitalisierung bei Maßnahmen zur Steigerung der Materialeffizienz. Bisher dominieren im Verarbeitenden Gewerbe eher klassische effizienzsteigernde Maßnahmen, die die Herstellungsprozesse optimieren, aber auch neue Techniken und Materialien kommen zum Einsatz. Grundlegende Weichenstellungen für eine moderne Kreislaufwirtschaft sind in vielen Unternehmen noch nicht vorhanden, da es noch nicht so verbreitet ist, Materialien im großen Stil bereits beim Produktdesign, über eine Kreislaufführung oder neue Geschäftsmodelle, einzusparen. Die Materialeinsparpotenziale sind in der Industrie noch nicht erschöpft und bei optimalen Einsatz der verfügbaren technischen Möglichkeiten, könnten nach Auffassung der Unternehmen noch weitere 3 bis 4 Prozent eingespart werden. Bezogen auf den Wert der in Deutschland aus dem In- und Ausland bezogenen Menge an mineralischen Rohstoffen liegt das realisierbare Einsparpotenzial somit bei knapp 2 Milliarden Euro. Maßnahmen für mehr Materialeffizienz sind bislang nur selten hochgradig digitalisiert und wenn dann - vor allem bei großen Unternehmen - am ehesten bei der Prozessoptimierung. Rund zwei Fünftel der Unternehmen sind bei den wichtigsten industriellen Effizienzmaßnahmen - Prozessoptimierung und der Verwendung neuer Techniken zumindest im mittleren Maße digitalisiert, aber mehr als ein Drittel auch noch gar nicht. Am häufigsten sind Unternehmen bei der betriebsübergreifenden Kreislaufführung überhaupt digitalisiert, eine Maßnahme, die jedoch nur von zwei Fünftel der Industrieunternehmen angewandt wird. Es besteht noch Potenzial für mehr Digitalisierung bei Produktdesign, Kreislaufführung und neuen Geschäftsmodellen. Obwohl mindestens jedes zweite verarbeitende Unternehmen über eine interne Kreislaufführung Rest- und Abfallstoffe wiederverwertet, spielen digitale Netze bei zwei Fünfteln dieser Unternehmen bisher keine und bei weiteren zwei Fünfteln nur eine kleine Rolle. Nur etwa jedes zehnte Unternehmen ist stark digital vernetzt. Mehr als jedes zweite Industrieunternehmen nutzt Maßnahmen, die beim Produktdesign ansetzen, um Ressourcen zu schonen. Bisher ist fast die Hälfte dieser Unternehmen nicht digital vernetzt - und wenn doch eher nur geringfügig. Ein Drittel der Industrieunternehmen sieht bisher in neuen Geschäftsmodellen einen effizienzsteigernden Weg. Davon sind drei von zehn dieser Unternehmen bisher nicht digitalisiert, weitere zwei Fünftel nur geringfügig. Unternehmen, die Digitalisierung bereits strategisch verankert haben, sind Vorreiter auf dem Weg zu mehr Materialeffizienz, da sie öfter materialeffizienzsteigernde Maßnahmen intensiv nutzen, eher weitere Einsparpotenziale erkennen und dann auch deutlich häufiger im hohen Maße digitalisiert sind.
    JEL: Q55 Q32 D21 O32
    Date: 2017
  9. By: Elizabeth Colucci (European University Association); Hanne Smidt (European University Association); Axelle Devaux (RAND Europe); Charalambos Vrasidas (Centre for the Advancement of Research and Development in Educational Technology (CARDET)); Malaz Safarjalani; Jonatan Castaño Muñoz (European Commission – JRC)
    Abstract: The final report of MOOCs4inclusion, designed and financed by the Joint Research Center of the European Commission, summarises the research conducted for a five-month study (July-December 2016) on the efficiency and efficacy of free digital learning (FDL) offers for the integration, inclusion and further learning of migrants and refugees in Europe and in neighbourhood regions in conflict. Drawing from a literature review, focus groups with migrant/refugees (third country nationals in Europe) and interviews with representatives of selected FDL initiatives, the report assesses the success factors and limitations of FDL and draws conclusions for enhancing its efficiency and efficacy. The report also proposes a categorisation of FDL offers according to their design and purposes. Emphasis is placed on initiatives that take a ‘blended’ (online and face-to-face) and ‘facilitated’ (support services and mentoring) approach, as this was found to be optimal by both users of FDL and providers. General recommendations are provided for how the European Union and other interested actors can invest in this field, enhance synergies and design effective and efficient FDL offers for migrants/refugees in the future.
    Keywords: migration, refugees, open education MOOCs, free digital learning, e-learning
    Date: 2017–04
  10. By: Kim , Jeong-Gon (Korea Institute for International Economic Policy); Na , Seung Kwon (Korea Institute for International Economic Policy); Jang , Jong-Moon (Korea Institute for International Economic Policy); Lee , Sung Hee (Korea Institute for International Economic Policy); No , Suyeon (Korea University)
    Abstract: Korean Abstract: 인터넷과 ICT가 산업 혁신을 촉진하는 핵심요소로 크게 주목받으면서 디지털 산업혁신을 위한 각국의 정책적 노력이 확대되고 있다. 본 보고서는 디지털 산업혁신의 이론을 체계적으로 제시하고, 범용기술로서 ICT의 산업별 생산성 파급효과를 검증하는 한편, 주요국의 디지털 산업혁신 역량을 요인별로 비교분석하였다. 그리고 디지털 산업혁신을 주도하는 미국, EU 및 독일, 일본, 중국의 정책을 체계적으로 분석·평가하였으며, 이상의 연구결과와 한국의 정책에 대한 검토를 토대로 디지털 산업혁신의 정책방향을 제시하였다. English Abstract: The digital transformation, which is often called as the Fourth Industrial Revolution, is attracting attention as a new driving force for economic growth. Digitalization is emerging as a measure to mid- and long-term trends, such as demographic change and transition to a low-carbon economy, while leading economic and industrial innovation. It is confirmed empirically that for high-income countries including the United States, digitization contributes to productivity improvement in other industries. However, these effects differ from country to country depending on the capabilities of digital innovation such as ICT infrastructure, R&D investment, ICT industry competitiveness, legal system, human resources, business use of ICT, and entrepreneurial activities. In Korea, ICT infrastructure is world-class, and ICT adoption and utilization are highly competitive. However, the competitiveness of ICT services, the effectiveness of R&D investment, contribution to innovation, legal system, human resources and entrepreneurial activities are far behind. By contrast, the United States has the highest level of competitiveness in ICT export, R&D investment and innovation, human resources and entrepreneurial activity. These factors are key concerns of the countries' digital innovation policy, and each country is making a policy effort centering on it. The digital innovation policies of the United States, EU, Germany, Japan and China are similar due to the general characteristics of digital transformation, but they vary according to the capabilities and circumstances of each country. As in our analysis, the United States most clearly demonstrates the general purpose technology hypothesis that ICT capital contributes to increased productivity in the industry. In the United States, ICT has been a key driver of economic growth since the 1980s, and digital innovations led by Internet platform companies have become a source of mid- and long-term economic growth in the Obama administration. Recently, in the United States, innovation in the digital innovation is dominated by ICT or Internet service companies, and traditional manufacturing companies are also reviving through digitization. The US government is constantly investing in strategic research areas and advanced technologies required for digital innovation based on Strategy for American Innovation or NITRD, a government-level IT research and development program. In addition, the federal government operates a Chief Information Officer (CIO) and a Chief Technology Officer (CTO) to improve digital-based government management and to accelerate industrial innovation. The private sector is leading digital innovation while the government focuses on R&D investment in digital industry platforms and basic technologies such as big data and Internet of Things, solving public problems using ICT, and building consumer information protection systems.
    Date: 2016–12–30
  11. By: Antonelli, Cristiano (University of Turin)
    Abstract: The introduction of information and communication technologies (ICT) has changed in depth the organization of the generation of knowledge reducing significantly knowledge absorption cost and improving knowledge interactions. The digital generation of knowledge relies on the systematic access and use of the stock of quasi-public knowledge. ICT enable to reconsider the knowledge appropriability trade-off as it helps to better appreciate the positive role of knowledge spillovers in the recombinant generation of new knowledge, next to the well-known negative effects of the limited appropriability of knowledge on revenues and hence incentives to innovate. This new analytical framework calls for an augmented role of telecommunications policy that should take into account the positive effects of knowledge connectivity on the generation of knowledge.
    Date: 2017–03
  12. By: CARRONI Elias (Universita di Bologna); PAOLINI Dimitri (Universita di Sassari, CRENoS and CORE, UCL)
    Abstract: We analyze the optimal decision of a monopolistic streaming platform. The platform obtains contents from copyright owners (artists) who are paid with a per-user royalty. Advertisers pay a per-user fee to display their commercials. Users value the variety of contents and are heterogeneously bothered by ads. We show that when commercials generate an intermediate nuisance and the size of the potential market is large, the platform finds it optimal to offer only a paying subscription without displaying any ads. In contrast, a small potential market results in the offer of a menu of subscriptions, with ad-intolerant users paying a positive price and moderately-averse users opting for a free-of-charge solution. The second (first) solution is always preferred when commercials generate a strong (weak) nuisance. We also show that there may emerge a misalignment of the platform’s and artists’ interests.
    Date: 2017–03–01
  13. By: Nicolas van Zeebroeck; Jacques Bughin
    Keywords: Digital transformation; Digital strategy; Platforms; Incumbent capabilities; Demand-side economies of scale
    JEL: L22 L25 M15 O33
    Date: 2017–04–25
  14. By: Camilleri, Silvio John; Ellul, Denise
    Abstract: In order for banks to supplement their market share, it is crucial for them to entice new customers such as students who are expected to join the workforce at a subsequent stage. The main aim of this paper is to survey the banks' tactics in this regard, the response of students to such schemes, and the aspects which such customers consider when selecting a particular service provider or when switching to another one. We conduct interviews with bank representatives and distribute questionnaires to first year university students in order to gauge whether particular factors are more important than others in the selection of a financial services provider. We find that there are various aspects which banks may leverage upon to entice potential customers to switch away from competing service providers, especially due to the fact that switchers tend to respond differently to given characteristics in their decision making process.
    Keywords: bank marketing, customer loyalty, Malta, retail banking, students' bank accounts, young customers
    JEL: M30 M31
    Date: 2017–02–04
  15. By: Acar, Kemal Veli
    Abstract: Psycho-sociological and legal aspects of online child sexual abuse such as criminalization, offender profiling, and rehabilitation have been thoroughly studied in the literature. The economics of the issue may appear relatively insignificant at first sight, considering the devastating effects on victims. However, understanding the child abuse materials' economic value better is crucial for developing more effective crime prevention strategies particularly for emerging threats, since the disruption of an illicit market is closely related to the perceived value of such materials. Even for relatively traditional methods like membership-only commercial websites, law enforcement responses do not appear to recognize the economic facts of child abuse materials as digital goods. Similar to the legal actions taken against conventional forms of crime, law enforcement agencies preferred to take down the markets of such materials. Thus, they diminished the demand and supply of child abuse materials by shutting down online platforms and apprehending the abusers. However, in line with technological advances, new ways of offending have emerged that make these measures almost useless. Specific characteristics and dangers of these emerging threats from an economic perspective seem underestimated or completely ignored. This paper aims to analyze the economic aspect of online child abuse materials as a type of digital goods, and it discusses how new forms of commercial sexual exploitation such as crowdfunding and webcam child prostitution challenge the widely accepted policies on the fight against online child sexual abuse.
    Keywords: online child sexual abuse,commercial sexual exploitation,child abuse materials,crime prevention,policy making,crowdfunding,webcam child prostitution
    JEL: A10 K42
    Date: 2017
  16. By: Weizsäcker, Georg (Humboldt University Berlin and DIW Berlin); Zankiewicz, Christian (DIW Berlin)
    Abstract: We measure the quality of applications for online peer-to-peer lending in Germany and relate it to gender discrimination. The data context allows summarizing application quality as a single numeric measure, the expected internal rate of return. The measure serves as a control variable and is interacted with the applicants\' gender. We find that women enjoy higher funding rates than men, mainly because they are less punished when they offer a low application quality. The evidence is consistent with the hypothesis that the predominantly male lenders have a less precise understanding of women\'s applications than of men\'s applications.
    Keywords: Gender discrimination; household finance; irrational beliefs;
    JEL: D14 D84
    Date: 2017–03–25

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