nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2017‒08‒06
seven papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. Making Money: Commercial Banks, Liquidity Transformation and the Payment System By Christine Parlour
  2. The Transactions Demand for Paper and Digital Currencies By Koichiro Kamada
  3. What future for the Post Office network? By Christian Jaag; Matthias Finger
  4. Myth-busting? How research is refuting common perceptions about unconditional cash transfers By Amber Peterman; Jennifer Yablonski; Silvio Daidone; UNICEF Office of Research - Innocenti
  5. The Bitcoin Mining Game: On the Optimality of Honesty in Proof-of-work Consensus Mechanism By Juan Beccuti; Christian Jaag
  6. Promoting prenatal health care in poor rural areas through conditional cash transfers: evidence from JUNTOS in Peru By Díaz, Juan José; Saldarriaga, Víctor
  7. The competitive landscape of online platforms By Nestor Duch-Brown

  1. By: Christine Parlour (UC Berkeley)
    Abstract: We consider the interaction between the roles of a bank as a facilitator of payments in the economy and as a lender. In our model, banks make loans by issuing digital claims to an entrepreneur, who then uses them to pay for inputs. Issuing digital claims has two effects on a bank’s liquidity. First, some of these claims used as payment are cashed in before the project is over, necessitating transfers in the inter-bank market to meet these intermediate liquidity needs. Second, the lending bank must transfer reserves to the other banks when the project is done to settle its claims. Each of these transfers has a cost; the endogenous interest rate in the inter-bank market and a settlement cost for final transfers. These costs, in turn, are frictions that affect bank lending. Banks in our model are strategic. If productivity is similar, a high cost of final transfers leads to a coordination friction and multiple equilibria, with each bank trying to match the average number of digital claims issued by other banks. We consider the effects of financial innovations (i.e., FinTech) on the payments system and show that a reduction in the need for intermediate liquidity can lead to an increase in the inter-bank interest rate, because it also induces each bank to increase its lending. We also show that innovations may shift investments from more productive to less productive regions.
    Date: 2017
  2. By: Koichiro Kamada (Deputy Director-General, Institute for Monetary and Economic Studies, Bank of Japan (E-mail:
    Abstract: This paper investigates optimal currency choice, particularly the choice between paper and digital currencies, when currency is utilized solely as a medium of exchange. The Baumol-Tobin model of transactions demand for money is extended to derive conditions under which digital currency is preferred to paper currency, taking into consideration the network externality in the choice of currencies. The model is applied to explain potential variations in currency preferences across countries, especially between advanced and developing economies. Also discussed is how the introduction of negative interest rates, currency taxes, and central bank digital currency affect optimal currency choice.
    Keywords: Digital currency, Money demand, Network externality, Negative interest rate, Currency tax
    JEL: E41 E58 E20 P44
    Date: 2017–07
  3. By: Christian Jaag; Matthias Finger
    Abstract: Incumbent postal operators are particularly challenged by rapid technological developments and especially by digitalization which substitutes their letter mail, yet generally boosts parcel volumes. As a consequence, they have to rethink their strategy, especially for their post office network. The paper presents potential strategies and discusses the main trends in postal network evolution among incumbent postal operators, focusing in particular on the examples of Australia, New Zealand, Switzerland, the United Kingdom, Italy and the United States, and assesses these strategies against a set of key performance and development indicators.
    Keywords: Postal Sector, Postal network, Postal strategy
    JEL: L43 L51
    Date: 2017–07
  4. By: Amber Peterman; Jennifer Yablonski; Silvio Daidone; UNICEF Office of Research - Innocenti
    Abstract: Six common perceptions associated with cash transfers are investigated using data from eight rigorous evaluations of government unconditional cash transfer programmes across seven countries in sub-Saharan Africa. The evidence refutes each claim. Used in policy debates, these perceptions undermine well-being improvements and poverty reduction, in Africa and globally.
    Date: 2017
  5. By: Juan Beccuti; Christian Jaag
    Abstract: We consider a game in which Bitcoin miners compete for a reward of each solved puzzle in a sequence of them. We model it as a sequential game with imperfect information, in which miners have to choose whether or not to report their success. We show that the game has a multiplicity of equilibria and we analyze the parameter constellations for each of them. In particular, the minimum requirement to find it optimal not to report is decreasing with the number of miners who are not reporting, and increasing the heterogeneity among players reduces the likelihood that they choose not to report.
    Keywords: Bitcoin, Mining, Proof of work, Game theory
    JEL: C72 D84
    Date: 2017–08
  6. By: Díaz, Juan José (Grupo de Análisis para el Desarrollo (GRADE)); Saldarriaga, Víctor (Grupo de Análisis para el Desarrollo (GRADE))
    Abstract: Se evaluaron los efectos de JUNTOS, un programa de transferencias monetarias condicionadas dirigido a los hogares rurales pobres del Perú, en el uso de atención de salud prenatal por parte de mujeres expuestas al programa durante su embarazo más reciente. Se implementó la técnica de estimación de diferencias en diferencias para estimar los efectos de JUNTOS en el uso de atención de salud prenatal, la calidad de la atención de salud prenatal, el uso de atención de salud en el momento del parto, y complicaciones obstétricas durante el parto. Se utilizó información pública de las Encuestas Demográficas y de Salud del periodo 2004-2014. Los resultados sugieren que el programa ha incrementado el uso de atención de salud prenatal. Aún más resaltante, los hallazgos también sugieren una mejora en la calidad de la atención de salud recibida y una disminución de las complicaciones obstétricas durante el parto.
    Keywords: Programa Juntos, Atención prenatal, Zonas rurales, Pobreza, Transferencias monetarias, Perú, Prenatal Care, Rural areas, Poverty, Monetary transfers, Peru
    JEL: I18
    Date: 2017
  7. By: Nestor Duch-Brown (European Commission – JRC)
    Abstract: This paper describes the different forces that shape the market structure of four different 'online platform ecosystems' and the competition between them. The paper focuses on the following categories of platforms, which represent a wide scope of online activities: (i) e-commerce marketplaces; (ii) app stores; (iii) social media; and (iv) online advertising platforms. A central concern is to provide descriptive, empirical evidence on the relative strength of the forces operating in each case. In the past decade or so, many theoretical and conceptual contributions have been very helpful in developing a clear understanding of many of the issues around multi-sided markets, and have analysed these activities from many different perspectives. Unfortunately, they have provided hardly any empirical evidence. This paper attempts to reduce the lack of empirical evidence available on online platforms.
    Keywords: digital single market, data economy, online platforms, multi-sided markets
    JEL: D23 K11 K12 L86
    Date: 2017–07

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