nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2017‒05‒14
seventeen papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. Accelerating Digital Trade in Latin America and the Caribbean By Kati Suominen
  2. The Future of Retail Financial Services: What policy mix for a balanced digital transformation? By Bouyon, Sylvain
  3. From Start-up to Scale-up: Examining Public Policies for the Financing of High-Growth Ventures By Durufle, Gilles; Hellmann, Thomas F; Wilson, Karen
  4. Public Blockchain versus Private blockchain By Dominique Guegan
  5. Where Do Banks Fit in the Fintech Stack? : a speech at the Northwestern Kellogg Public-Private Interface Conference on "New Developments in Consumer Finance: Research & Practice", April 28, 2017 By Brainard, Lael
  6. Efeitos da desoneração tributária sobre a difusão da banda larga no Brasil: Enfoque na incidência do FISTEL sobre o terminal de acesso individual por satélite. By Charlita de Freitas, Luciano; Euler de Morais, Leonardo; Cervieri Guterres, Egon
  7. Borrowers in Search of Feedback : Evidence from Consumer Credit Markets By Inessa Liskovich; Maya Shaton
  8. A Blockchain Application in Energy By Hukkinen, Taneli; Mattila, Juri; Ilomäki, Juuso; Seppälä, Timo
  9. Speeding up the internet: regulation and investment in European fiber optic infrastructure By Wolfgang Briglauer; Carlo Cambini,; Michał Grajek
  10. Digitalisation and intermediaries in the music industry By Hviid, Morten; Izquierdo Sanchez, Sofia; Jacques, Sabine
  11. License and entry strategies for an outside innovator under duopoly with combination of royalty and fixed fee By Hattori, Masahiko; Tanaka, Yasuhito
  12. How Is the Internet Changing Labor Market Arrangements? Evidence from Telecommunications Reforms in Europe By Emmanuel Vazquez; Hernan Winkler
  13. Les élèves favorisés et défavorisés utilisent-ils Internet différemment ? By OCDE
  14. Tracking chinese vulnerability in real time using Big Data By Carlos Casanova; Alvaro Ortiz; Tomasa Rodrigo; Le Xia; Joaquín Iglesias
  15. Optimal data collection for randomized control trials By Pedro Carneiro; Sokbae Lee; Daniel Wilhelm
  16. Where is the information on USD/Bitcoins hourly price movements? By Helder Sebastião; António Portugal Duarte; Gabriel Guerreiro
  17. The Power of Big Data: Historical Time Series on German Education By Claude Diebolt; Gabriele Franzmann; Ralph Hippe; Jürgen Sensch

  1. By: Kati Suominen
    Abstract: The Internet roared to the scene in Latin America and it is transforming the way Latin Americans interact, shop, bank, and spend their time. The Internet is changing regional consumption patterns, the landscape of regional companies, and the region's economic prospects. Disruptive digital technologies riding on the web -cloud-based services, e-commerce, 3D printing, Internet of Things, and so on- are empowering LAC companies of all sizes to dramatically cut costs, improve customer service, and create brand new products and services. The region is also home to innovative digital companies run by intrepid entrepreneurs, some of whom have accessed significant investments from Silicon Valley and grown into some of the leading digital companies. The Internet, in short, has opened tremendous new opportunities for LAC economies to become more productive, expand opportunities for entrepreneurship, and drive inclusive economic growth.
    Keywords: E-Commerce, Export Diversification, Exports of Service, Small and Medium-Sized Enterprises, Startups, Electronic Commerce, E-Commerce
    JEL: O39
    Date: 2017–03
  2. By: Bouyon, Sylvain
    Abstract: In recent years, the digitalisation of retail financial services – retail payments, current/savings accounts, consumer/housing credit, car insurance, property insurance and health insurance – has accelerated significantly. While policy-makers are gradually creating the necessary conditions to strengthen this digital transformation, there remain numerous policy issues and unanswered questions to resolve. Against this background, CEPS-ECRI formed a Task Force to explore four specific core questions: What type of level playing field is needed to ensure a successful transition to the digital transformation? What are the opportunities and risks related to big (alternative) data and increasingly sophisticated algorithms? What kind of regulatory framework is the most appropriate for pre-contractual information duties in a digital era? How can the regulatory framework for digital authentication be improved? This report presents the findings of the Task Force, based on discussions among the members, led by the Chairman Kim Vindberg-Larsen, a FinTech entrepreneur. These findings are substantiated and elaborated via in-depth research carried out by the author Sylvain Bouyon, CEPS-ECRI Research Fellow. Co-published with Rowman and Littlefield International (RLI), this book can also be purchased for £12.9, either in paperback or as an e-Book from the RLI website.
    Date: 2017–02
  3. By: Durufle, Gilles; Hellmann, Thomas F; Wilson, Karen
    Abstract: This paper examines the challenge of entrepreneurial companies to go beyond the start-up phase and grow into large successful companies. We examine the long-term financing of these so-called scale-up companies, focusing on the US, Europe and Canada. The paper first provides a conceptual framework for understanding the challenges of financing scale-ups. It then shows some data about the various aspects of financing scale-ups in the US, Europe and Canada. Finally the paper raises the question of long-term public policies for supporting the creation of a better scale-up environment.
    Date: 2017–04
  4. By: Dominique Guegan (Centre d'Economie de la Sorbonne and LabEx ReFi)
    Abstract: In this document, we introduce some thinkings relative to the concept of blockchain, how it works and what are the issues for the banking system. Thus, first we recall what cryptography is, then we introduce the concept of blockchain as a protocol for transmitting information in a secure way, distinguishing two possible approaches: the decentralized public approach and the centralized private approach. The notion of cryptocurrency is introduced and two examples of applications of the public blockchains that are the bitcoin and the etherium are provided
    Keywords: blockchain; Cryptography
    JEL: C
    Date: 2017–04
  5. By: Brainard, Lael (Board of Governors of the Federal Reserve System (U.S.))
    Date: 2017–05–08
  6. By: Charlita de Freitas, Luciano; Euler de Morais, Leonardo; Cervieri Guterres, Egon
    Abstract: This study analyzes the economic and tax effects of an eventual equalization of the satellite based access terminals and mobile cellular broadband, for the purpose of charging the Telecommunications Inspection Fund (FISTEL). Estimates of demand were elaborated with the aid of empirical instruments to gauge the price elasticity and projections of demand for broadband service. Results indicate that the eventual equalization of taxes incidence induces growth of the band penetration in Brazil, as well as generates positive effects on the aggregate of the tax revenue from satellite broadband providers.
    Keywords: Banda Larga; Satélite; Banda Ka; FISTEL; Broadband;Satellite;Brazil; Ka band
    JEL: O1 O2 O23 O25 O3 O33 O38 O4
    Date: 2017–04
  7. By: Inessa Liskovich; Maya Shaton
    Abstract: We study recent technological innovation in credit markets and document their role in providing information to households. We show that households value the ability to learn detailed information about their cost of credit. This function is most valued by less creditworthy households with less experience in credit markets. To measure the demand for information provision we exploit a quasi-natural experiment in an online consumer credit market. A large lending platform unexpectedly switched from pricing loans through an auction mechanism to centralized pricing determined by broad credit grade. This change resulted in an instant decrease in the amount of tailored feedback available to market participants. We find that less experienced households immediately and disproportionately exit the market and the response is concentrated among higher risk households. We rule out alternative explanations such as changes in access to credit, borrower risk profiles, and interest rate levels. Our findings point to a potentially important role for financial innovation: enabling less experienced households to more easily learn about their credit market options.
    Keywords: Consumer finance ; Fintech ; Household finance ; Online lending markets
    JEL: D12 D14 G20
    Date: 2017–05
  8. By: Hukkinen, Taneli; Mattila, Juri; Ilomäki, Juuso; Seppälä, Timo
    Abstract: Abstract This report documents a blockchain application developed for the energy sector that enables distributed market coordination for decentralized energy systems. As its core element, it utilizes Ethereum-based smart contracts to facilitate market matching between individual producers and consumers of electricity. The motive for this application was to understand the process of developing blockchain applications with industrial partners. Moreover, the purpose of this exercise was to examine whether Ethereum-based smart contracts could be effectively utilized for similar applications in industry and society at large. The application and the discussions during its development indicate that similar horizontal market structures may spring up in value chains in which the dynamicity of the market is growing and in which the roles of the market actors are shifting from fixed roles towards switch-role markets.
    Keywords: Blockchain, application, distributed marketplace, energy industry, Ethereum, smart contract
    JEL: L1 L17 L52 L73 L94
    Date: 2017–05–03
  9. By: Wolfgang Briglauer (Zentrum für Europäische Wirtschaftsforschung GmbH (ZEW) Mannheim); Carlo Cambini, (Politecnico di Torino); Michał Grajek (ESMT European School of Management and Technology)
    Abstract: In this paper we study how the coexistence of access regulations for legacy (copper) and fiber networks shapes the incentives to invest in network infrastructure. To this end, we develop a theoretical model explaining investment incentives by incumbent telecom operators and heterogeneous entrants and test its main predictions using panel data from 27 EU member states over the last decade. Our theoretical model extends the existing literature by, among other things, allowing for heterogeneous entrants in internet access markets, as we consider both other telecom and cable TV operators as entrants. In the empirical part, we use a novel data set including information on physical fiber network investments, legacy network access regulation and recently imposed fiber access regulations. Our main finding is that more stringent access regulations for both the legacy and the fiber networks harm investments by incumbent telecom operators, but, in line with our theoretical model, do not affect cable TV operators.
    Keywords: Internet access market, access regulation, investment, infrastructure, next generation networks, broadband, telecoms, cable operators and Europe
    JEL: L96 L51
    Date: 2017–05–03
  10. By: Hviid, Morten; Izquierdo Sanchez, Sofia; Jacques, Sabine
    Abstract: Prior to digitalisation, the vertical structure of the market for recorded music could be described as a large number of artists [composers, lyricists and musicians] supplying creative expressions to a small number of larger record labels and publishers who funded, produced, and marketed the resulting recorded music to subsequently sell these works to consumers through a fragmented retail sector. We argue that digitalisation has led to a new structure in which the retail segment has also become concentrated. Such a structure, with successive oligopolistic segments, can lead to higher consumer prices through double marginalisation. We further question whether a combination of disintermediation of the record labels function combined with “self-publishing” by artists, will lead to the demise of powerful firms in the record label segment, thus shifting market power from the record label and publisher segment to the retail segment, rather than increasing the number of segments with market power.
    Keywords: Streaming; self publishing; music industry
    JEL: K0 K2 O34
    Date: 2017–03–01
  11. By: Hattori, Masahiko; Tanaka, Yasuhito
    Abstract: We consider a choice of options for an innovating firm to enter the market with or without licensing its new cost-reducing technology to the incumbent firm using a combination of a royalty per output and a fixed license fee, or to license its technology without entry. With general demand and cost functions we show the following results. When the innovating firm licenses its technology to the incumbent firm without entry, the optimal royalty rate per output for the innovating firm is zero with negative fixed fee, and when the innovating firm enters the market and at the same time licenses its technology to the incumbent firm, the optimal royalty rate is positive with positive or negative fixed fee. Also we show that when cost functions are concave, the optimal royalty rate is one such that the incumbent firm drops out of the market and license without entry strategy and entry with license strategy are optimal for the innovator; and when cost functions are strictly convex, there is an internal solution of the optimal royalty rate under duopoly and entry with license strategy is optimal for the innovator.
    Keywords: duopoly, royalty, fixed license fee
    JEL: D43 L13
    Date: 2017–05–01
  12. By: Emmanuel Vazquez (CEDLAS-FCE-UNLP); Hernan Winkler (World Bank)
    Abstract: This paper exploits variations in the timing of telecommunications reforms across Europe to analyze the relationship between the rise of alternative work arrangements and the emergence of the Internet. The paper evaluates whether sectors that are technologically more dependent on information and communications technologies experienced disproportionately larger changes in their employment outcomes after telecommunications reforms were introduced. The main results point to a disproportionate increase in total employment, parttime work, and home-based work among information and communications technologies–intensive sectors after the implementation of telecommunications reforms. The analysis does not find a link between the incidence of temporary employment, selfemployment, second job holding, and telecommunications reforms. The main results are robust to several specifications.
    JEL: J20 J23 O33
    Date: 2017–04
  13. By: OCDE
    Abstract: Les élèves défavorisés des pays à revenu faible ou intermédiaire ont moins de possibilités d’accès à Internet que leurs pairs favorisés. S’il est important de combler cet écart, l’expérience des pays à revenu élevé montre néanmoins que, même lorsque tous les élèves ont facilement accès à Internet, des inégalités persistent dans la capacité d’apprendre à utiliser les outils numériques. Pour avancer sur le chemin de l’égalité des chances à l’ère du numérique, il s’avère bien plus efficace de garantir que chaque enfant atteigne au moins un niveau de compétences de base en compréhension de l’écrit que de généraliser ou de financer l’accès à des outils et services de dernier cri.
    Date: 2017–05–06
  14. By: Carlos Casanova; Alvaro Ortiz; Tomasa Rodrigo; Le Xia; Joaquín Iglesias
    Abstract: We develop an indicator to track vulnerability sentiment in China. In order to ensure robustness and depth, we use a combination of traditional macroeconomic and financial time series with textual analysis using Big Data techniques.The index is composed by the following dimensions: state owned enterprises; shadow banking; housing market bubble and exchange rate market.
    Keywords: Asia , China , Economic Analysis , Regional Analysis , Watch , Working Paper
    JEL: C55 C38 C43 D81
    Date: 2017–05
  15. By: Pedro Carneiro (Institute for Fiscal Studies and University College London); Sokbae Lee (Institute for Fiscal Studies and Institute for Fiscal Studies); Daniel Wilhelm (Institute for Fiscal Studies and cemmap and UCL)
    Abstract: In a randomized control trial, the precision of an average treatment effect estimator and the power of the corresponding t-test can be improved either by collecting data on additional individuals, or by collecting additional covariates that predict the outcome variable. We propose the use of pre-experimental data such as other similar studies, a census, or a household survey, to inform the choice of both the sample size and the covariates to be collected. Our proce-dure seeks to minimize the resulting average treatment effect estimator’s mean squared error or the corresponding t-test’s power, subject to the researcher’s budget constraint. We rely on a modi?cation of an orthogonal greedy algorithm that is conceptually simple and easy to implement in the presence of a large number of potential covariates, and does not require any tuning parameters. In two empirical applications, we show that our procedure can lead to reductions of up to 58% in the costs of data collection, or improvements of the same magnitude in the precision of the treatment effect estimator.
    Keywords: randomized control trials, big data, data collection, optimal survey design, orthogonal greedy algorithm, survey costs.
    Date: 2017–03–27
  16. By: Helder Sebastião (CeBER and Faculty of Economics of the University of Coimbra); António Portugal Duarte (CeBER and Faculty of Economics of the University of Coimbra); Gabriel Guerreiro (Faculty of Economics of the University of Coimbra)
    Abstract: This paper analyses the price discovery process in the USD/Bitcoin market since the Mt.Gox bankruptcy until the aftermath of the hack attack on Bitfinex (01-Mar-2014 until 30-Nov-2016). The Geweke feedback measures, estimated pairwise using hourly returns, show that there is a positive relationship between the total feedback and market share, measured by trading volume, that most of the information is transmitted between exchanges within an hour, at least for the main four exchanges (Bitfinex, Bitstamp, BTC-e and ItBit), while lagged feedback runs mainly from the major exchange. Other minor exchanges seem to react to price information with some delay and are thus considered as merely satellite exchanges. Bitfinex stands out as the most important exchange in transmitting information to the market: the relative importance of the lagged feedback from Bitfinex to the market is 18.29% while the lagged feedback from the market to Bitfinex accounts only for 0.60% of the total feedback. The volatility in the major exchange in each pair is the main factor explaining the feedback measures, sustaining the claim that the information-based component of volatility increases with the relative dimension of the exchange.
    Keywords: Bitcoin, price discovery, Geweke feedback measures, volume, volatility.
    JEL: F13 G12 G14 G15
    Date: 2017–05
  17. By: Claude Diebolt (BETA, University of Strasbourg Strasbourg, France); Gabriele Franzmann (GESIS Leibniz Institute for the Social Sciences, Cologne, Germany); Ralph Hippe (European Commission, Joint Research Centre (JRC), Directorate for Growth and Innovation, Human Capital and Employment Unit.); Jürgen Sensch (GESIS Leibniz Institute for the Social Sciences, Cologne, Germany)
    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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