nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2017‒06‒04
fourteen papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. The Impact of Digital Financial Services on Firm's Performance: a Literature Review By Tariq Abbasi; Hans Weigand
  2. The Strategic National Infrastructure Assessment of Digital Communications By Edward Oughton
  3. Has Uber Made It Easier to Get a Ride in the Rain? By Abel Brodeur; Kerry Nield
  4. Family ties: the intersection between data protection and competition in EU Law By Francisco Costa-Cabral; Orla Lynskey
  5. An Empirical Analysis on the Sharing Economy: The Case of Airbnb in Warsaw By Kristof Gyod
  6. The introduction of the distributed ledger technology in banking system as an alernative for Single European Payment Area solutions By Michal Elzbieta Jantoñ-Drozdowska; Alicja Mikolajewicz-Wozniak
  7. B2B digital marketing strategy: A framework for assessing digital touchpoints and increasing customer loyalty By Elina Bakhtieva
  8. Open source projects as incubators of innovation: From niche phenomenon to integral part of the software industry By Schrape, Jan-Felix
  9. Digital economy in Polish regions. Proposal of measurement via TOPSIS with generalized distance measure GDM By Adam P. Balcerzak; Michal Bernard Pietrzak
  10. The determinants of crowdfunding development – empirical analysis in the countries of Central and Eastern Europe By Joanna Bednarz; Magdalena Markiewicz; Agnieszka Ploska
  11. “Internet and enterprise productivity:evidence from Latin America” By Juan Jung; Enrique López-Bazo; Matteo Grazzi
  12. Price Manipulation in the Bitcoin Ecosystem By Gandal, Neil; Hamrick, JT; Moore, Tyler; Oberman, Tali
  13. The Security Level of the Results of Intellectual Activity and Piracy: Mathematical Modeling of the Impact on Public Wealth By Shastitko, Andrey E.; Morosanova, Anastasia A.; Meleshkina, Anna I.
  14. Forecasting Demand for Denominations of Chilean Coins and Banknotes By Camila Figueroa; Michael Pedersen

  1. By: Tariq Abbasi; Hans Weigand
    Abstract: Digital Financial Services continue to expand and replace the delivery of traditional banking services to the customers through innovative technologies to meet the growing complex needs and globalization challenges. These diversified digital products help the organizations (service providers) to improve their firm performance and to remain competitive in the market. It also assists in increasing market share to grow their profitability and improve financial position. There is a growing literature on Digital Financial Services and firm performance. At this point of the development, this paper systemically reviews the existing (within last one decade) amount of literature investigating the impact of DFS on firm performance, analyzes and identifies the research gaps. We identify 39 works that have appeared in a wide range of peer-reviewed scientific journals. We classify the methodologies and approaches that researchers have used to predict the effect of such services on the financial growth and profitability. We observe that despite rapid technological advancement in DFS during the last ten years, Digital Financial Services being the factor affecting firm performance did not get the reasonable attention in academic literature. One of the reason is that almost all the authors limit their research to banking sector while ignoring others particularly mobile network operators (providing branchless banking) and new non-banking entrants. We also notice that newer researchers often ignore past research and investigate the same issues. This study also makes several recommendations and suggest directions for future research in this still emerging field.
    Date: 2017–05
  2. By: Edward Oughton (Cambridge Judge Business School, University of Cambridge)
    Abstract: This paper provides a compendium of the key issues currently facing digital communications and reviews their relevance for the UK's National Infrastructure Assessment of digital infrastructure. The methodology focuses on taking a horizon scanning approach to obtaining current information from a range of authoritative decision-makers across industry, government and academia. After structuring the issues identified, these areas were examined in detail by a multi-disciplinary research team covering engineering, economics and computer science. The key finding shows that future demand uncertainty is the major issue affecting the digital communications sector and holding back increased investment. Moreover, this uncertainty is being driven primarily by the relatively rigid willingness to pay of end-users, the shift from fixed to wireless forms of access, and the ongoing convergence in digital applications and services. The key contribution of this paper is not just to illustrate the issues and trends within the digital communications sector, but also to identify the need for more research to understand how the sensitivity of future demand affects infrastructure performance and cost under different demographic, economic and technical scenarios.
    Date: 2017–05
  3. By: Abel Brodeur (University of Ottawa, Ottawa, ON); Kerry Nield (Bank of Canada, Ottawa, ON)
    Abstract: In New York City (NYC), it has been a common complaint that it is difficult to find a taxi in the rain. Using all Uber rides in NYC from April to September 2014 and January 2015 to December 2016, we show that the number of Uber rides is significantly correlated with whether it rained. The number of Uber rides per hour is about 18 percent higher when it is raining, suggesting that surge pricing encourages an increase in supply. During the same time period, the number of taxi rides per hour increases by only 5 percent in rainy hours. We then show that the number of taxi rides, passengers and fare income all significantly decreased after Uber entered the New York market in May 2011, suggesting that Uber is depressing taxi demand. Last, we test whether the total (Uber plus taxi) number of rides in rainy hours increased since May 2011. Our estimates suggest that it is relatively easier to get a ride in rainy than in non-rainy hours in post-Uber years.
    Keywords: Persistence, Rain, Uber, Taxi, Dynamic Pricing
    JEL: D01 D03 L92 J22
    Date: 2017
  4. By: Francisco Costa-Cabral; Orla Lynskey
    Abstract: Personal data has become the object of trade in the digital economy, and companies compete to acquire and process this data. This rivalry is subject to the application of competition law. However, personal data also has a dignitary dimension which is protected through data protection law and the EU Charter rights to data protection and privacy. This paper maps the relationship between these legal frameworks. It identifies the commonalities that facilitate their intersection, whilst acknowledging their distinct methods and aims. It argues that when the material scope of these legal frameworks overlap, competition law can incorporate data protection law as a normative yardstick when assessing non-price competition. Data protection can thus act as an internal constraint on competition law. In addition, it advocates that following the legal and institutional changes brought about by the Lisbon Treaty, data protection and other fundamental rights also exercise an external constraint on competition law and, in certain circumstances, can prevent or shape its application. As national and supranational regulators grapple with the challenge of developing a dynamic information economy that respects fundamental rights, recognition of these constraints would pave the way for a more coherent EU law approach to a digital society.
    JEL: L81
    Date: 2017–02
  5. By: Kristof Gyod (University of Warsaw)
    Abstract: Research background: Consumption habits and the provision of services have undergone significant changes in the recent years. Platforms made way for new business models, which are often referred to as sharing economy or collaborative economy. Among the most valuable firms of the sharing economy is Airbnb, a platform for short-term accommodation rentals. Purpose of the article:The aim of the article is to analyse the characteristics of the Airbnb network in Warsaw, Poland. The paper investigates to what extent Airbnb may generate value from underused assets and whether it brings tourism todistricts previously less popular among visitors. Methodology/methods:The analysis is based on a unique dataset, which contains all Airbnb listings of Warsaw. The dataset has been constructed by the author using web-scraping technology. Descriptive statistics and kernel density estimation are implemented for the empirical analysis. Findings & Value added: The vast majority of the Airbnb network is focused on the short-term rental of entire homes and apartments in the city centre. Furthermore, the majority of listings belong to hosts, who offer more than one accommodation. The characteristics of the network suggest that the potential of Airbnb to generate value from underused assets is restricted: the primary activity of Airbnb decreases the number of properties on the long-term housing market. Comparing to traditional hotels, Airbnb is not significantly facilitating tourism in the outer districts of the city. The main contribution of the paper to the literature is the analysis of the entire population of Airbnb in a major city and the comparison with the traditional services sector. This is also the empirical analysis on the sharing economy and Airbnb in Poland.
    Keywords: sharing economy, two-sided markets, digital economy, tourism
    JEL: R12 D23 C81
    Date: 2017–05
  6. By: Michal Elzbieta Jantoñ-Drozdowska (University in Poznañ, Poland); Alicja Mikolajewicz-Wozniak (University in Poznañ, Poland)
    Abstract: The year 2016 ended the period of migration from national payment services to the SEPA instruments and it has become apparent that some problems remained unresolved. Overcoming them requires finding suitable technological solutions. The potential of distributed ledger technology (DLT) is currently explored by financial sector and its implementation may affect the SEPA schemes in a variety of dimensions. The aim of the article is to determine the potential impact of the DLT transfer to banking sector on the future SEPA’s functioning. The paper presents SEPA’s assumptions and the project’s current status as well as DLT’s concept. It describes the technology transfer implications for banking industry and compares currently operating SEPA schemes with those based on DLT. It also indicates opportunities and threats being the consequence of the new technology implementation and their significance for SEPA.In the article the qualitative analysis is supplemented by the quantitative one. While characterizing the functioning of the main pillars of the SEPA Schemes the elements of descriptive statistics are used. The final conclusions are based on the comparative analysis of SEPA schemes and developed DLT applications. The existing problems might be solved by supplementing currently operating SEPA payment schemes with the applications based on DLT. The developed systems shall provide required real-time processing and a global reach as well as extend the SEPA schemes’ functionalities with the ability to transfer other currencies. The technology implementation shall result not only in new financial products but first of all – in creating new business models. Consequently, we shall expect the modification of currently operating SEPA schemes, based rather on their supplement than total replacement in a short time horizon.
    Keywords: SEPA; blockchain; distributed ledger technology; virtual currencies; financial integration
    JEL: F36 G15 G21
    Date: 2017–05
  7. By: Elina Bakhtieva (Tomas Bata University in Zlín)
    Abstract: Digital marketing has changed the nature of company-to-customer communication. With rising information overload and reduced decision-making time, touchpoints have gained additional importance by yielding customer loyalty. Yet the existing digital marketing tools have failed to keep pace with these trends. Companies are lacking a simple framework that focuses on a digital marketing strategy built around touchpoints and customer loyalty. This is especially relevant for B2B companies, which due to their specifics are more dependent on customers and less flexible in adapting of new digital trends. A B2B business strategy tailored to digital trends demands a re-evaluation of prior understanding of a product portfolio, a company’s internal and external environment. The purpose of the article is to present a framework that helps to undertake the necessary changes and enables the connections with industry. The suggested model has been drawn from the literature review and been extended based on the findings of an empirical multiple case study. Aspiring to follow trends in digital marketing and to help B2B companies to adapt their strategy to ongoing changes in company-to-customer communication, a new framework has been developed. The framework aims to increase customer loyalty and focuses on channels/touchpoints, assets, skills, audience and customer journey. The model could be beneficial for Chief Marketing Officers (CMO) and other C-levels by offering a simple and reliable tool for improving a company's position in the digital marketplace. Moreover, it enables continuously adjustment of an already existing business strategy.
    Keywords: digital marketing, customer loyalty, touchpoints, B2B digital marketing strategy, B2B industrial companies
    JEL: M31 L1
    Date: 2017–05
  8. By: Schrape, Jan-Felix
    Abstract: Over the last 20 years, open source development has become an integral part of the software industry and a key component of the innovation strategies of all major IT providers. Against this backdrop, this paper seeks to develop a systematic overview of open source communities and their socio-economic contexts. I begin with a reconstruction of the genesis of open source software projects and their changing relationships to established IT companies. This is followed by the identification of four ideal- typical variants of current open source projects that differ significantly in their modes of coordination and the degree of corporate involvement. Further, I examine why open source projects have mainly lost their subversive potential while, in contrast to former cases of collective invention, remaining viable beyond the emergence of predominant solutions and their commercial exploitation: In an industry that is characterized by very short innovation cycles, open source projects have proven to be important incubators for new product lines and branch-defining infrastructures. They do not compete against classical forms of production but instead complement and expand these.
    Date: 2017
  9. By: Adam P. Balcerzak (Nicolaus Copernicus University); Michal Bernard Pietrzak (Nicolaus Copernicus University)
    Abstract: Investing in digital infrastructure and building effective digital economy is currently considered as a basic condition for keeping international competitiveness of developed economies. In the case of developing countries in some economic models it is considered as a factor that can help to avoid middle income trap. From the regional perspective developing digital economy can support the process of convergence and closing development gap between the regions. As a result, a comparative research concerning the development level of digital economy is an important scientific task. In this context, the aim of the article is to assess and compare the development level of digital economy in Polish regions (NUTS 1). The digital economy is commonly considered as a multiple-criteria phenomenon. Thus, an approach based on TOPSIS method with application of generalized distance measure GDM was used in the analysis. Six diagnostic variables concerning digital infrastructure and level of its utilization were used. The research was conducted for the years 2012-2015 with application of Eurostat Data. The conducted analysis confirmed relatively quick progress in the field of building digital economy obtained by Polish regions.
    Keywords: digital economy; multiple-criteria analysis; TOPSIS; generalized distance measure GDM
    JEL: P25 C38
    Date: 2017–05
  10. By: Joanna Bednarz (Institute of International Business, University of Gdansk); Magdalena Markiewicz (Institute of International Business, University of Gdansk); Agnieszka Ploska (Self-employed, a company owner)
    Abstract: Research background: Crowdfunding (CF) is a method of raising money for projects and enterprises by an online platform. Since around 2003 it is getting popular and becoming a natural method of pre-financing for start-ups before reaching out to investors. The estimations gave the scale of raising worldwide 35 bn USD via CF platforms in 2015. In 2016 CF was on track to surpass venture capital investments. Yet, this method doesn’t progress equally worldwide and it is essential to find out what makes the difference of its development between the countries. Purpose of the article: The aim of the article is to examine the potential relation between: (1) the welfare of the countries, (2) structure of population and (3) availability of crowdfunding. The research is dedicated to the chosen countries of Central and Eastern Europe (CEE) in the period of 2005-2015, giving a perspective of changes in different terms of economy. Methodology/methods: This article, theoretical and empirical in character, is based on international desk research findings. The authors used methods of data collection, organizing and processing information. Moreover, they implemented methods of analogy and deduction, while studying papers, as well as the selection, analysis and synthesis methods. Findings: There is no direct correlation between GDP per capita of the country with it online alternative investments per capita. The richness of the country does not influence people willingness to invest money through online tools. In the countries of average level of welfare, alternative financing is used more widely. Moreover, there is a significant impact of the age structure of the population on the crowdfunding development. Estonia has the youngest structure of population and even there are not many inhabitants and the GDP per capita is average, the country has the most willing online crowd investors.
    Keywords: crowdfunding, social funding, innovation, financing, CEE
    JEL: G24 L26 M13 O16 O53
    Date: 2017–05
  11. By: Juan Jung (AQR-IREA, University of Barcelona); Enrique López-Bazo (AQR-IREA, University of Barcelona); Matteo Grazzi (Inter-American Development Bank)
    Abstract: This paper tests three hypotheses regarding the link between internet and firm productivity: i) internet adoption and use constitute a source of productivity growth for firms in Latin America, ii) the intensity of its use also matters, and iii) the link between the new technologies and productivity levels is not uniform over the whole productivity distribution. The evidence in this paper fills the gap of scarce and fragmented literature focused on Latin America, and is aligned with previous research for more developed regions which has generally recognized that Information and Communication Technologies (ICTs) have radically changed how modern business are conducted, benefitting firm performances through several channels, such as increasing the efficiency of internal processes, expanding market reach or increasing innovation.Our findings suggest that low-medium productive firms benefit more from an expansion in internet adoption and use, in comparison with the most productive ones. If this evidence is supposed to reflect long-term effects, then public policies oriented to massify internet adoption and promote internet use intensively will surely contribute to reduce inequalities of enterprise’s productivity levels, promoting a level playing field among Latin American firms, something especially relevant for the most unequal region of the world.
    Keywords: ICT, Internet, Productivity, firms, Latin America JEL classification: D22, O31, O33, O54
    Date: 2017–05
  12. By: Gandal, Neil; Hamrick, JT; Moore, Tyler; Oberman, Tali
    Abstract: We identify and analyze the impact of suspicious trading activity (STA) on the Mt. Gox Bitcoin currency exchange between February and November 2013. We discuss two distinct STA periods in which approximately 600,000 bitcoin (BTC) valued at $188 million were acquired by agents who did not pay for the bitcoins. During the second period, the USD-BTC exchange rate rose by an average of $20 at Mt. Gox on days when suspicious trades took place, compared to a slight decline on days without suspicious activity. Based on rigorous analysis with extensive robustness checks, we conclude that the suspicious trading activity caused the unprecedented spike in the USD-BTC exchange rate in late 2013, when the rate jumped from around $150 to more than $1,000 in two months.
    Keywords: Bitcoin; Crytocurrencies; Price Manipulation
    Date: 2017–05
  13. By: Shastitko, Andrey E. (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Morosanova, Anastasia A. (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Meleshkina, Anna I. (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: This work reflects the main aspects that must be taken into account when developing and modifying policies for regulating the sphere of intellectual property. Piracy, despite all its obvious shortcomings, has a number of positive properties, which can be useful for the owners of the rights to RIA: informational, network and indirect effects. The paper presents a mathematical model, showing a case where the protection of RIA introduced in contrast to the actions of Pirates may cause more damage to public welfare than itself piracy. There is a need for a more flexible tool (than the system of intellectual property), which would make each owner of the IP able to choose required level of protection.
    Date: 2017–02
  14. By: Camila Figueroa; Michael Pedersen
    Abstract: Monetary authorities have to plan how many units of coins and bank notes they need to buy / produce to meet the needs of the economy. With data from the Central Bank of Chile, the process of supplying coins and banknotes to the banking sector is described. This is followed by exercises aiming at finding useful models for forecasting cash demand for the horizons up to three years, which are the relevant ones for planning purchases and delivery of individual banknotes in Chile. With respect to the aggregate circulating stock of cash, time series models seem to perform better for the one–year–ahead horizon, while models based on fundamental variables are better for two and three years. Time series models for each denomination seem to be the best forecasting option to guide the purchases of notes and coins.
    Date: 2017–02

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