nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2017‒06‒11
nineteen papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. The Future of Money: A Voyage Through Time and Space By Bernardo Batiz-Lazo; Leonidas Efthymiou
  2. Is DLT the Cure for the Omni-Channel Blues? A Provocation By Bernardo Batiz-Lazo
  3. Essays on competition between fixed and mobile networks in the broadband industry and on scientific publications issued by innovative companies By Lauriane Dewulf
  4. Socioeconomic determinants of the mobile money adoption process: the case of Togo By Komivi Afawubo; Messan Agbaglah; Mawuli K. Couchoro; Tchapo Gbandi
  5. Blockchain Cryptocurrency Backed with Full Faith and Credit By John P. Conley
  6. Virtual Currencies and Beyond; Initial Considerations By Sheila Bassett; Anupam Basu; Tamim Bayoumi; Thomas Baunsgaard
  7. A critical approach to expanding the Financial Services Access for the Poor By Pankaj Kumar Baag
  8. Determinants of digital technology use by companies By Timothy DeStefano; Koen de Backer; Laurent Moussiegt
  9. Women in Digital India: An In-depth Analysis of Preparation for Digital Inclusion By Anindita Paul; Kim M. Thompson
  10. Exploring the determinants of Bitcoin's price: an application of Bayesian Structural Time Series By Obryan Poyser
  11. Tourism-Growth Nexus in the South Pacific Islands: Role of Financial Sector Development as a Contingent Factor An Empirical Study of Fiji: 1980-2014 By Jayaraman, Tiru; Choong, Chee-Keong; Fatt Ng, Cheong; Bhatt, Markand
  12. Stepping up the game: The role of innovation in the sharing economy By Demary, Vera
  13. Between novelty and fashion.Risk management and the adoption of computers in retail banking. By Bernardo Batiz-Lazo
  14. Established industries as foundations for emerging technological innovation systems: The case of solar photovoltaics in Norway By Jens Hanson
  15. Access to credit and financial health: evaluating the impact of debt collection By Fonseca, Julia; Strair, Katherine; Zafar, Basit
  16. Blockchain and the Economics of Crypto-tokens and Initial Coin Offerings By John P. Conley
  17. You’ve Got Email: A Workflow Management Extraction System By Piyanuch Chaipornkaew; Takorn Prexawanprasut; Michael McAleer
  18. El papel de la tecnología en una tienda de moda en un entorno omnicanal By Ana Mosquera; Emma Juaneda-Ayensa; Cristina Olarte-Pascual; Yolanda Sierra-Murillo
  19. Organized Crime and Technology By Mustafa Caglayan; Alessandro Flamini; Babak Jahanshahi

  1. By: Bernardo Batiz-Lazo (Bangor University); Leonidas Efthymiou (UNICAF - Intercollege Larnaca)
    Abstract: In this paper we look backwards and sideways to ascertain elements that are likely to determine the future of cash as well as cashless payment systems. Our analysis begins in medieval Europe while examining how legal tender and fiat money was imposed on people during the primitive accumulation era (Marx, [1887] 2015). Primitive accumulation marks the transition to a market economy. Paper money played a central role in the transformation of socio-economic relations as part of the imposition of wage labour upon self-producing, self-sufficient and self-provisioning populations. But primitive accumulation has been conceived as more than just a period of transition that led to the development of capitalistic socio-economic relations, to encompass a set of forces that permanently reproduce accumulation and capital’s existence (Bonefeld, 2001; Dalla Costa & Dalla Costa, 1995; De Angelis, 2001; Perelman, 2001). Following this broader conception of primitive accumulation, we trace practices in Fordism and post-Fordism to explain how the emergence of a cashless/checkless economy results not only technological change and a drive for cost efficiency within financial institutions, but also results from economic restructuring, labour de-skilling and general changes in the social and cultural landscape. We content that market forces as well as government policy have contributed to the diffusion and adoption of cashless means of payment, within an intensifying automation and mobilisation of daily life where digital money is likely to outpace cash. Furthermore, the transparency (or lack of) with which these decisions have taken place, indicates the extent to which the government and business elites value the right to information and freedom of choice. The move to a cashless/checkless economy thus epitomises how money is also subject to the freedom versus security debate that is fast becoming one of the quintessential quandaries of the 21st century.
    Date: 2016–11
  2. By: Bernardo Batiz-Lazo (Bangor University)
    Abstract: A current trend in both retailing and retail financial services aims to match customers to their purchases with the least amount of friction. For depositary institutions this entails enabling customers to deal with their financial affairs, including purchases, through whatever channel the customer chooses (branch, ATM, web, mobile, etc.). For merchants, it entails shipping and delivering the purchase when and how the customer chooses (in store, at a desired location, at a pick-up point, etc.), while settling outstanding financial claims with the different actors involved in the manufacturing, storage, shipping and distribution network. This essay briefly explores the potential use of distributed ledger technology (DLT) to deliver integrated omni-channel solutions
    Date: 2017–05
  3. By: Lauriane Dewulf
    Abstract: Abstact 1 - Over the past few years, mobile broadband technologies and speeds have greatly increased in the European Union, reaching an ever larger share of broadband consumers. These changes have implications for broadband market competition. In the past, mobile services offered slow but mobile internet whereas fixed services offered faster but fixed internet. Fixed and mobile broad-band were therefore obviously complementary services. While mobile broadband speeds have significantly increased over the latest years, fixed broadband is remaining rather a fixed technol-ogy. Consequently, if mobile broadband becomes fast enough considering some consumers’ needs, we believe that the same consumers will choose to use only the mobile broadband tech-nology (who by itself offers high-speed and mobility) instead of both fixed and mobile broad-band technologies. As a result, we may observe an increasing trend towards fixed to mobile substitution. Our study investigates empirically this trend. More specifically, it analyzes the im-pact of mobile broadband technology evolution - through 4G adoption - on fixed to mobile sub-stitution in the 28 European countries from 2009 until 2015. The few studies examining this sub-ject show that fixed to mobile substitution exists although none of these studies analyze the evo-lution of this substitution. The results confirm a significant existence of a fixed to mobile substi-tution in the EU, and show that this substitution is more than doubled when a country adopts 4G. The growing competitive pressure from mobile operators also provides fixed operators with incentives to acquire – or merge with – mobile operators. This fact should be a concern for policy makers as it could have harmful consequences for competition and investment on the broad-band market.
    Abstract: Abstract 2 - Whereas open science – i.e. publishing articles in scientific journals – had been largely studied on the academic side, there is still a need to explore the subject on the industry side. This study spe-cifically analyzes the role of academic institutions in firms’ scientific publications and uses a novel approach to explore the subject. Publications issued from collaborations with academic institutions are indeed differentiated from other publications. The first type of publications is considered as an indicator of firms’ collaborative activities with academic institutions whereas the second type of publications is considered as the result of firms’ strategies and/or firms’ capa-bilities to publish. This study provides evidence that industry publications are a valuable signal to attract academic partners. In addition, this study provides evidence that potential academic partners are more willing to team up with firms’ researchers who have proven their ability to achieve high-quality research/publications without the help of academic partners. Finally, the study provides evidence that past successful collaborations with academic partners lead the firm to reiterate such collaborations in the short term (2 years max.).
    Abstract: Abstract 3 - The objective of this study is twofold. First, it provides further knowledge on the subject of prof-itability of industry science/publications as it is not clear yet whether industry sci-ence/publications are profitable to firms. Second, it considers the central role of academic part-ners in the profitability of firms’ scientific publications as previous empirical studies do not con-sider such role. To investigate the subject, we perform several regressions with firms profits as dependent variable. The results provide evidence that the publication of scientific articles is not a profitable activity in itself (as it was demonstrated in two previous studies). Collaborations with academic institutions are the real basis of profitable results; the production of scientific publica-tions is only one of the consequences of these collaborations. This study also shows that not all collaborations are profitable, only collaborations in high-tech sectors that lead to high-quality publications lead to larger profits. Indeed, in their quest for survival and profitability, companies competing in high-tech sectors often need the help of academic partners to exploit scientific knowledge. On average, a rise of about 7% in successful collaborations (leading to high-quality publications) raises the profit of high-tech firms by about 1%. -
    Abstract: Abstract 4 - This chapter analyzes the factors influencing the quality of the output of I-A collaborations ap-proximated by the quality of the I-A co-publications. More specifically it analyzes two subjects that are typically complicated to study empirically because of a lack of available data: (1) it compares US and EU I-A partnerships and (2) it discusses if and how internet is a useful tool in I-A collaborations. The results empirically confirm that EU universities are less efficient partners than US universities when collaborating with the private sector. This study also demonstrates a much larger gap between EU and US academic partners in high-tech sectors. Finally, the results provide evidence that broadband is a useful tool for international I-A collaborations although broadband is less important in the success of I-A international collaborations in high-tech sectors compared to lower-tech sectors.
    Keywords: telecommunications; competition; innovation
    Date: 2017–05–22
  4. By: Komivi Afawubo (CEREFIGE-Universite de Lorraine;CRESE-Universite de Franche-Comte); Messan Agbaglah (Labour Program, Government of Canada; GREDI); Mawuli K. Couchoro (CERFEG-Universite de Lome); Tchapo Gbandi (INSEED-Togo)
    Abstract: Togo is lagging in the adoption of mobile money in the West African Economic and Monetary Union (WAEMU). The country’s share in the WAEMU is less than one percent of account opening, volume, and level of transactions. To understand this delay, it is essential to identify the socioeconomic factors that determine the adoption of the usage of mobile money services in Togo. Departing from the traditional literature which considers the adoption of mobile money as a one-shot phenomenon, this paper models the adoption of mobile money as a five-step process and identifies the likelihood of its adoption based on an Ordered Logit model applied on data from a survey conducted on a sample of 5,197 individuals. We find that social groups, including religious groups and student associations, are powerful vehicles for the adoption of mobile money in Togo. In addition, the ability to read and write and being a customer of a bank or a Microfinance Institution (MFI) positively impact the mobile money adoption process. In contrast, being unemployed decreases the likelihood to adopt mobile money.
    Keywords: Mobile money; Innovation; Adoption; Process.
    JEL: O31 O33 Z13
    Date: 2017–04
  5. By: John P. Conley (Vanderbilt University)
    Abstract: The major advantages of blockchain based cryptocurrencies are the independent verifiability of transactions and the anonymity that they allow. Blockchains can also process transactions at much lower cost than banks and credit card companies. On the other hand, the value of cryptocurrencies is quite volatile. In addition, the crypto-ecosystem is not easy to access for many less technologically savvy consumers and it is especially difficult to make financial connections to the outside world. These factors limit the utility of cryptocurrencies as a store of value and a medium of exchange, respectively. This paper proposes the creation of CryptoBucks, a cryptocurrency backed 100% by dollars. CryptoBucks solve the problem of volatility and offer various levels of privacy and anonymity depending on how the system is implemented.
    Keywords: Blockchain, Cryptocurrency, Tokenization, Fiat Currency, AML, KYC, PPK, PKI, Encryption, Bitcoin
    JEL: E5 G1
    Date: 2017–06–06
  6. By: Sheila Bassett; Anupam Basu; Tamim Bayoumi; Thomas Baunsgaard
    Abstract: New technologies are driving transformational changes in the global financial system. Virtual currencies (VCs) and the underlying distributed ledger systems are among these. VCs offer many potential benefits, but also considerable risks. VCs could raise efficiency and in the long run strengthen financial inclusion. At the same time, VCs could be potential vehicles for money laundering, terrorist financing, tax evasion and fraud. While risks to the conduct of monetary policy seem less likely to arise at this stage given the very small scale of VCs, risks to financial stability may eventually emerge as the new technologies become more widely used. National authorities have begun to address these challenges and will need to calibrate regulation in a manner that appropriately addresses the risks without stifling innovation. As experience is gained, international standards and best practices could be considered to provide guidance on the most appropriate regulatory responses in different fields, thereby promoting harmonization and cooperation across jurisdictions.
    Date: 2016–06–20
  7. By: Pankaj Kumar Baag (Indian Institute of Management Kozhikode)
    Abstract: We critically look at the factors of expanding financial services access for the poor in terms of measure, impact, policies, barriers and promotion along with actions taken in the Indian context in the past and the present. We suggest that the corrective actions to be taken in the future should be more dynamic with respect to market development along the path to an inclusive digital financial system tailor made to our interventions based around four initiatives: continuous new payment system with right scale and size; regular financial services at right scale and size; continuous new partnership with new differential players; and research and Innovation.
    Keywords: Financial Inclusion, Innovation, Principle and Policies, Financial Intermediaries, Regulations
    Date: 2017–03
  8. By: Timothy DeStefano; Koen de Backer; Laurent Moussiegt
    Abstract: Advances in digital technologies are transforming the way firms function, how they are structured and the manner in which they compete. This paper contributes to our understanding of digital technology usage by assessing changing patterns in the use of hardware and software and identifying the extent to which various plant characteristics and policy environments correlate with ICT investment. The results suggest notable changes in the use of a number of digital technologies across countries between 2000 and 2012. A range of establishment-level determinants appear to be important for hardware and software investment including size, being in a knowledge intensive sector and if the establishment is the headquarters. The effects of policy measures however are markedly different across various ICTs. Heterogeneity in the effects of policy indicators on a number of ICTs suggest a reconsideration is needed regarding the relevance of traditional aggregate policy measures for digital technology use.
    Date: 2017–06–07
  9. By: Anindita Paul (Indian Institute of Management, Kozhikode); Kim M. Thompson (School of Information Studies, Charles Sturt University,Australia)
    Abstract: A holistic outlook of inclusive growth can be achieved with higher and equitable citizen participation. Digital governance cannot be bereft of the end-user perspective. The purpose of this particular study is to present factors that may affect digital technology use by middle class Indian women in particular. The study follows the interpretive paradigm and is situated to explore an understanding of culture and gender in the Indian context. Applying Venkatesh’s (2003) UTAUT model of technology acceptance we have discussed the four categories of users identified in our study.
    Date: 2017–04
  10. By: Obryan Poyser
    Abstract: Currently, there is no consensus on the real properties of Bitcoin. The discussion comprises its use as a speculative or safe haven assets, while other authors argue that the augmented attractiveness could end accomplishing money's functions that economic theory demands. This paper explores the association between Bitcoin's market price and a set of internal and external factors using Bayesian Structural Time Series Approach. I aim to contribute to the discussion by differentiating among several attractiveness sources and employing a method that provides a more flexible analytic framework that decompose each of the components of the time series, apply variable selection, include information on previous studies, and dynamically examine the behavior of the explanatory variables, all in a transparent and tractable setting. The results show that the Bitcoin price is negatively associated with a neutral investor's sentiment, gold's price and Yuan to USD exchange rate, while positively related to stock market index, USD to Euro exchange rate and variated signs among the different countries' search trends. Hence, I find that Bitcoin has mixed properties since still seems to act as a speculative, safe haven and a potential a capital flights instrument.
    Date: 2017–06
  11. By: Jayaraman, Tiru; Choong, Chee-Keong; Fatt Ng, Cheong; Bhatt, Markand
    Abstract: Tourism in recent years has emerged as the engine of growth in Pacific island countries. In Fiji in particular, it has relegated its traditional sugar exports to third place. Besides the steadily increasing air passenger traffic, there has been a rising trend in cruise ship arrivals. Short visits by cruise ship travelers have become additional sources of income for a host of small scale tourist operators and vendors, most of them being outside the informal sector in around its two major ports. In this context, financial inclusion efforts have assumed greater importance as these incomes in some part can find their way as savings into banks. The role of financial sector development (FSD) has thus become a critical factor in the tourism-growth nexus. This paper finds while the FSD indicator when individually employed, whether as broad money or bank credit to private sector is supportive of the growth nexus, the interaction term is has emerged with a negative sign indicating that FSD does not play a complementary role. The financial sector of Fiji is still shallow, despite considerable progress in financial inclusion efforts, measures towards deepening of FSD depend not on one front of mobilization of savings, but on all round progress in various segments of financial sector.
    Keywords: Fiji, Tourism, economic growth, financial sector development, bounds testing
    JEL: O47
    Date: 2017–05–31
  12. By: Demary, Vera
    Abstract: While the sharing economy is generally perceived to be very innovative, it has hardly been analyzed what defines this innovativeness. The main aspect for the sharing economy as a whole is the peer-to-peer (P2P) organization of its businesses. This allows sharing platforms to enter markets more easily, consequently increasing com-petition in these markets. In addition to that, many sharing platforms are also techno-logically innovative or apply a tested concept in a new setting. Increased competition may result in even more innovation in order to keep customers satisfied and boost the benefit these derive from participating in the sharing economy. However, in most affected markets, there is no level playing field yet between the established incum-bents and the new sharing platform entrants. This calls for urgent action on the side of policy-makers to foster innovation in the sharing economy while enabling fair com-petition.
    JEL: L12 L51 L86 O31
    Date: 2017
  13. By: Bernardo Batiz-Lazo (Bangor University)
    Abstract: This chapter explores developments in researching the adoption of applications of computer technology by retail deposit-accepting financial institutions. Contributions to date suggest an understanding of both technological and business decisions. This is a research agenda informed by developments both in the history of computing and in business and economic history because the analysis of computer applications in business should consider not only how decisions came about but also the expectations of decision makers and the context and stakeholders that helped to shape business decisions. This is a view which aligns with that of Wadhwani and Jones’ (2014) “constitutive historicism” or the investigation of how economic actors’ perceptions of their own places in historical time shape their strategies.
    Date: 2017–06
  14. By: Jens Hanson (University of Oslo)
    Abstract: This paper follows up on recent debates on relations between technological innovation systems (TISs) and context. Particular focus is placed on the role of established industries, which possess important resources for TIS formation. The paper contributes in two ways. First, the paper builds and expands upon the TIS framework to encompass beneficial relations between a TIS and its sectoral and technological context. Second, the framework is applied to the analysis of the emergence of a solar photovoltaic (PV) industry in Norway. The analysis first illustrates how an emerging TIS can benefit from an overlap with an established industry, which serves as a structural foundation and impacts key TIS processes. Second, the paper shows how relations between TIS and context change over time and range from supply chain interaction to more profound overlaps of system elements.
    Date: 2017–05
  15. By: Fonseca, Julia (Princeton University); Strair, Katherine (Federal Reserve Bank of New York); Zafar, Basit (Federal Reserve Bank of New York)
    Abstract: Despite the prevalence of debt collection and the intense regulatory activity surrounding this industry, little is known about how these practices impact consumers. This paper conducts an empirical analysis of the effect of debt collection on consumer credit and on indicators of financial health, employing individual credit record data and a difference-in-differences research design that compares outcomes for consumers in states that increased the restrictiveness of legislation with those for consumers in the remaining states. We find consistent evidence that restricting collection activities leads to a decrease in access to credit and a deterioration in indicators of financial health. Moreover, our estimated treatment varies considerably with the borrower's age and baseline credit score, with effects concentrated primarily among borrowers with the lowest credit scores.
    Keywords: debt collection; financial well-being
    JEL: D12 D18 G18 K30
    Date: 2017–05–01
  16. By: John P. Conley (Vanderbilt University)
    Abstract: Blockchain startups have embraced initial coin offerings (ICOs) as a vehicle to raise early capital. The crypto-tokens offered in these sales are intended to fill a widely varied set of roles on different platforms. Some tokens are similar to currencies, others are more like securities, and others have properties that are entirely new. Each company's technological vision calls for a token with unique properties and uses. The main point of this paper is that designing a successful token must take into account certain aspects of monetary theory, financial economics, and game theory. Failing to do so can put an otherwise excellent project at risk. We also explore what economics tells us about how to assess the value of tokens offered for sale, how startups should structure their ICOs, and what the implications of assigning various roles to tokens on a platform might be.
    Keywords: Blockchain, Crypto-tokens, Cryptocurrency, Initial Coin Offering, Bitcoin, KYC, AML, ICO
    JEL: E5 G1
    Date: 2017–06–06
  17. By: Piyanuch Chaipornkaew (College of Innovative Technology and Engineering Dhurakij Pundit University, Thailand); Takorn Prexawanprasut (College of Innovative Technology and Engineering Dhurakij Pundit University, Thailand); Michael McAleer (Department of Quantitative Finance National Tsing Hua University, Taiwan And Discipline of Business Analytics University of Sydney Business School, Australia And Econometric Institute Erasmus School of Economics Erasmus University Rotterdam, Netherlands and Department of Quantitative Economics Complutense University of Madrid, Spain and Institute of Advanced Sciences Yokohama National University, Japan.)
    Abstract: Email is one of the most powerful tools for communication. Many businesses use email as the main channel for communication, so it is possible that substantial data are included in email content. In order to help businesses grow faster, a workflow management system may be required. The data gathered from email content might be a robust source for a workflow management system. This research proposes an email extraction system to extract data from any incoming emails into suitable database fields. The database, which is created by the program, has been planned for the implementation of a workflow management system. The research is presented in three phases: (1) define suitable criteria to extract data; (2) implement a program to extract data, and store them in a database; and (3) implement a program for validating data in a database. Four criteria are applied for an email extraction system. The first criterion is to select contact information at the end of the email content; the second criterion is to select specified keywords, such as tel, email, and mobile; the third criterion is to select unique names, which start with a capital letter, such as the names of people, places, and corporates; the fourth criterion is to select special texts, such as Co. Ltd. com, and www. The empirical results suggest that when all four criteria are considered, the accuracy of a program and percentage of blank fields are at an acceptable level compared with the results from other criteria. When four criteria are applied to extract 7,340 emails in English, the accuracy of this experiment is approximately 68.66%, while the percentage of blank fields in a database is approximately 68.05. The database created by the experiment can be applied in a workflow management system.
    Keywords: Business operations, startup business, import/export industry, email, business data, workflow management system, business transactions, migrating, email extraction system.
    JEL: J24 O31 O32 O33
    Date: 2017–05
  18. By: Ana Mosquera; Emma Juaneda-Ayensa; Cristina Olarte-Pascual; Yolanda Sierra-Murillo
    Abstract: El nuevo entorno omnicanal persigue ofrecer una experiencia de compra holística gracias a la integración de los canales online y offline, y para ello la introducción de la tecnología en la tienda física es un elemento clave. El objetivo de esta investigación es conocer cómo afecta el uso de diferentes tecnologías dentro de una tienda física de moda a la intención de compra. Para ello se ha desarrollado un modelo original, el cual ha sido testado con 628 clientes omnicanal. Los resultados muestran que la incorporación de tecnologías interactivas en la tienda física influye positivamente en la intención de compra.
    Keywords: Tecnología interactiva, comercio omnicanal, intención de compra, cliente omnicanal, moda.
    Date: 2017–05
  19. By: Mustafa Caglayan (Heriot-Watt University); Alessandro Flamini (Department of Economics and Management, University of Pavia); Babak Jahanshahi (Department of Economics and Management, University of Pavia)
    Abstract: This paper investigates the relation between the presence of organized crime and the technology level in north Italy. Our analysis proposes two provincial indexes. The first portrays technology at a fine-grained industrial sector level. The second describes mafia-type organizations in line with the investigation approach currently used by Italian National Antimafia Directorate (DNA) and Antimafia District Directorates (DDAs). With these indexes, we provide empirical evidence that in north Italy, the larger the presence of organized crime, the less innovation and the technological level of the industrial fabric. Our reading of this finding is that without organized crime, Nature selects agents according to their capacity to innovate. Instead, with organized crime, agents can choose an alternative strategy: relate with organized crime, which hinders innovation. Modelling the interaction innovation - relation with mafias by evolutionary game theory, we show that the presence of organized crime, through natural selection, leads to low levels of technology. Our model also shows how to use sanctions and indemnities to address the problem.
    Keywords: organized crime, evolutionary game theory, innovation, silent mafia, technology, technology index, mafia index, north Italy.
    JEL: O17 O30 C73 R11 K14 K42
    Date: 2017–05

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