nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2017‒10‒01
twenty papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. Doomed to Disappear? The Surprising Return of Cash Across Time and Across Countries By Jobst, Clemens; Stix, Helmut
  2. Privately Issued Money in the US By Jaremski, Matthew
  3. How Information Systems Enable Digital Transformation: A focus on Business Models and Value Co‐production By Marie‐hélène Delmond; Fabien Coelho; Alain Keravel; Robert Mahl
  4. Financial Innovation and Money Demand: Evidence from Sub-Saharan Africa By J. Paul Dunne; Elizabeth Kasekende
  5. Monopoly Without a Monopolist: An Economic Analysis of the Bitcoin Payment System By Huberman, Gur; Leshno, Jacob; Moalleni, Ciamac
  6. "Exploring Consumer Decision-making Processes Regarding the Adoption of Mobile Payments: A Qualitative Study" By Raden Agoeng Bhimasta
  7. Selling 'Money' on EBay: a Field Study of Surplus Division By Alia Gizatulina; Olga Gorelkina
  8. "Analysis of The Effect of Digital Word of Mouth (WOM) Marketing To Customer Purchase Decision" By Bunga Indah Bayunitri
  9. The Rise of On-Demand 'Instant Deliveries' in European Cities By Laetitia Dablanc; Eléonora Morganti; Niklas Arvidsson; Johan Woxenius; Michael Browne; Neila Saidi
  10. M-PESA and financial inclusion in Kenya: of paying comes saving? By Antoine Dubus; Leo Van Hove
  11. Differential Pricing of Traffic in the Internet By Manjesh K. Hanawal; Shashank Mishra; Yezekael Hayel
  12. Equity Crowdfunding and Early Stage Entrepreneurial Finance: Damaging or Disruptive? By Saul Estrin; Daniel Gozman; Susanna Khavul
  13. The inefficiency of Bitcoin revisited: a dynamic approach By Aurelio F. Bariviera
  14. Crowdsourcing Samples in Cognitive Science By Neil Stewart; Jesse Chandler; Gabriele Paolacci
  15. The Political Impact of the Internet on US Presidential Elections By Valentino Larcinese; Luke Miner
  16. "Evaluation of E-recruitment as a Business Model through Internet of Things Approach" By Deniss Sceulovs
  17. The Role of Punctuation in P2P Lending: Evidence from China By Xiao CHEN; Bihong HUANG; Dezhu YE
  18. Open source software adoption for safety-critical information systems design: the Thales case study By Nordine Benkeltoum
  19. The Contribution of Social Currencies to Microfinance: The Case of the Brazilian Community Development Banks By Tristan Dissaux; Camille Meyer
  20. How Segregated is Urban Consumption? By Donald R. Davis; Jonathan I. Dingel; Joan Monras; Eduardo Morales

  1. By: Jobst, Clemens; Stix, Helmut
    Abstract: The circulation of cash has increased in many economies over the past decade. To understand this development we provide evidence from two perspectives. First, we analyze long time series from the late 19th century to 2015 for several economies. Second, we collect evidence from 70 economies from 2001 to 2014. The descriptive account provides two main findings: (i) Recent increases for the euro, the US dollar and the Swiss franc are strong if seen over a 100 year horizon, (ii) increases can be observed in the majority of the 72 economies over the period from 2001 to 2014. Panel money demand models show that interest rates or GDP can only partially explain the increases in cash demand. The size of the shadow economy is not found to be an important factor for this period. We find that cash demand has evolved in line with a standard money demand model in economies with no record of financial crises. For economies that had a financial crisis in 2008, we find an increase in cash demand, on average. However, an "unexplained" increase is also obtained for wealthier economies that did not have a financial crisis in 2007/08 but before. We conjecture that the level shift in cash demand is related to increased uncertainty.
    Keywords: cash; Demand for currency; Financial crises; international comparison; monetary history
    JEL: E41 E42 N10
    Date: 2017–09
  2. By: Jaremski, Matthew (Department of Economics, Colgate University)
    Abstract: In recent years, there has been a revival of privately issued money. Due to the general lack of successful or even widely circulating private currency, it can be challenging to get a clear view of its efficiency using modern data. The U.S. historical period, however, offers a unique environment to examine the topic as private bank money made up a sizable portion of the money supply. Moreover, the period presents a wide range of regulation, including spans with and without the presence of a central bank or monetary authority. This chapter begins by highlighting the general history of privately issued money in the United States from 1790 through its elimination in the 1930s. Topics include the rise of state bank notes, the switch to national bank notes, clearinghouse currency, the Aldrich-Vreeland emergency currency associations, and the decline of private currency. It then examines open topics in the literature and provides suggestions for study going forward.
    Keywords: private currency, banks, bank notes, clearinghouses, and financial regulation
    JEL: E42 G21 N11
    Date: 2017–09–20
  3. By: Marie‐hélène Delmond (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique, HEC Paris - Recherche - Hors Laboratoire - HEC Paris - Ecole des Hautes Etudes Commerciales); Fabien Coelho (CRI - Centre de Recherche en Informatique - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University, MINES ParisTech - École nationale supérieure des mines de Paris); Alain Keravel (HEC Paris - Recherche - Hors Laboratoire - HEC Paris - Ecole des Hautes Etudes Commerciales); Robert Mahl (CRI - Centre de Recherche en Informatique - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University, MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: The digital economy has now a widespread impact on the whole economy and leads companies to transform and adopt new competition rules. Our objectives in this paper are 1) to analyze these evolutions and 2) to understand the role of informations systems in these changes. We have investigated two opposite environments: a pure Internet player selling an SaaS offering, and a traditional business that distributes products through a physical network of thousands of outlets. Our results show that both Internet players and traditional companies experience changes in the industry value chain, a growing importance of services, and develop new business models focused on an extended value proposition and cooperation with customers. The role of information systems is characterized by the evolution of the IT infrastructure, the expansion of inter organizational information systems and digital platforms and the development of new IT capabilities.
    Keywords: Information systems,digital economy,business models,value proposition
    Date: 2016–01
  4. By: J. Paul Dunne (School of Economics, University of Cape Town); Elizabeth Kasekende (Bank of Uganda)
    Abstract: While the effect of financial innovation on money demand has been widely researched in industrialised countries, because of its major role in monetary policy, few studies have focussed on developing countries. This is surprising given the considerable growth in financial innovation in Sub-Saharan Africa in recent years and its potential implications for developing country macroeconomic policy. This paper investigates the development of financial innovation and its impact on money demand in the region using panel data estimation techniques for 34 countries between 1980 and 2013. The results indicate that there is a negative relationship between financial innovation and money demand. This implies that financial innovation plays a crucial role in explaining money demand in Sub-Saharan Africa and given innovations such as mobile money in the region this can have important implications for future policy design.
    Date: 2017
  5. By: Huberman, Gur; Leshno, Jacob; Moalleni, Ciamac
    Abstract: Owned by nobody and controlled by an almost immutable protocol the Bitcoin payment system is a platform with two main constituencies: users and profit seeking miners who maintain the system's infrastructure. The paper seeks to understand the economics of the system: How does the system raise revenue to pay for its infrastructure? How are usage fees determined? How much infrastructure is deployed? What are the implications of changing parameters in the protocol? A simplified economic model that captures the system's properties answers these questions. Transaction fees and infrastructure level are determined in an equilibrium of a congestion queueing game derived from the system's limited throughput. The system eliminates dead-weight loss from monopoly, but introduces other inefficiencies and requires congestion to raise revenue and fund infrastructure. We explore the future potential of such systems and provide design suggestions.
    Keywords: Bitcoin; blockchain; cryptocurrency; market design; queueing; Two-sided markets
    JEL: D20 D40 L10 L50
    Date: 2017–09
  6. By: Raden Agoeng Bhimasta (Faculty of Economics and Business, Universitas Atma Jaya Yogyakarta, Indonesia. Author-2-Name: Budi Suprapto Author-2-Workplace-Name: Faculty of Economics and Business, Universitas Atma Jaya Yogyakarta, Indonesia.)
    Abstract: "Objective – The main objective of this study is to gain deeper understanding on the decision-making process of how and why consumers are adopting mobile payment in Indonesia. Methodology/Technique – The study was a qualitative study that included an experiment to the research design. A total of six young people were voluntarily participated in the study. Our finding provides explanation of salient factors that might drive or hinder the adoption in five different stages of innovation-diffusion process. Findings – Overall, our finding indicated that the attractiveness of rewards was an intriguing factor that greatly influences consumer decision whether to use mobile payment or not. Novelty – The uniqueness of our study lies on the use of innovative approaches to address the mobile payment adoption issues from different perspective than prior literatures."
    Keywords: "Consumers’ Decision-Making; Financial Technology; Innovation-Decision Process; Mobile Payment Adoption; Technology Adoption."
    JEL: M15 M31
    Date: 2017–06–28
  7. By: Alia Gizatulina (Max Planck Institute for Research on Collective Goods); Olga Gorelkina (University of Liverpool)
    Abstract: We study the division of trade surplus in a natural field experiment on German eBay. Acting as a seller, we offer Amazon gift cards with face values of up to 500 Euro. A random selection of buyers, the subjects of our experiment, make price offers according to the rules of eBay. Using a novel decomposition method, we infer the offered shares of trade surplus from the data and find that the average share proposed to the seller amounts to about $30 \%$. Additionally, we document: (i) insignificant effects of stake size; (ii) poor use of strategically relevant public information; and (iii) differences between East and West German subjects.
    Keywords: Field experiment, surplus division, bargaining, Internet trade, eBay
    JEL: C72 C93
    Date: 2017–08
  8. By: Bunga Indah Bayunitri (Economy Faculty of Widyatama University, Indonesia Author-2-Name: Fitri Nuraeni Author-2-Workplace-Name: Economy Faculty of Widyatama University, Indonesia Author-3-Name: Nenden Desi Author-3-Workplace-Name: Economy Faculty of Widyatama University, Indonesia)
    Abstract: "Objective – The study aims to explore the effect of digital Word of Mouth (WOM) marketing on customer purchase decision. Methodology/Technique – Types of research are a descriptive analysis and causal also measuring a conclusion by using a regression analysis and for hypothesis testing using t-test and F-test. Findings – The results of this research indicated that digital word of mouth marketing is effective and also has a influenced on customer purchase decision. The results show that digital word of mouth marketing included in the criteria of “Effective”, this means that customer respondents had a positive view about digital word of mouth marketing at Dusun Bambu by using these indicators: Talking, Promoting, and Selling. Novelty – It is suggested that the company can increase the quantity of purchases in one transaction by cooperating with local tour and travel agents in order to raise the number of visitors."
    Keywords: Digital Word of Mouth; Dusun Bambu; Marketing; Purchase Decision; Tourism.
    JEL: M31 M37
    Date: 2017–07–13
  9. By: Laetitia Dablanc (IFSTTAR/AME/SPLOTT - Systèmes Productifs, Logistique, Organisation des Transports et Travail - IFSTTAR - Institut Français des Sciences et Technologies des Transports, de l'Aménagement et des Réseaux - Communauté Université Paris-Est); Eléonora Morganti (University of Leeds); Niklas Arvidsson (RISE Research Institutes of Sweden); Johan Woxenius (GU - University of Gothenburg); Michael Browne (GU - University of Gothenburg); Neila Saidi (École d'architecture de la ville et des territoires de Marne-la-Vallée)
    Abstract: This exploratory paper contributes to a new body of research that investigates the potential of digital market places to disrupt transport and mobility services. We are specifically looking at the urban freight sector, where numerous app-based services have emerged in recent years. The paper specifically looks at 'instant deliveries,' i.e. services providing on-demand delivery within two hours - by either private individuals, independent contractors, or employees - by connecting consignors, couriers and consignees via a digital platform. The paper provides an overview of the main issues concerning instant deliveries, supported by data (including a survey of 96 courier delivery providers) and examples. After presenting a typology of companies (digital platforms) involved in 'instant deliveries,' we question in what way they transform the urban freight current patterns. We highlight four issues, discussing their potential to impact urban freight services and related policies in European cities: 1) Freight trips and data; 2) Business models; 3) Labor legislation and work conditions; and 4) Local public policies. We conclude by saying that predicting the medium-term consequences of these changes is difficult, but it is essential that city planning and policies take account of these developments and consider how planning and possibly regulation needs to be adapted to these new ways of doing things.
    Date: 2017
  10. By: Antoine Dubus (Télécom ParisTech); Leo Van Hove (VUB - Vrije Universiteit [Brussel])
    Abstract: Mobile financial services are said to promote inclusion. However, only 7.6 per cent of Kenyans have ever saved on an M-PESA account. This paper uses a novel, three-step probit analysis to identify the socio-demographic characteristics of, successively, respondents who do not have access to a SIM card, have access to a SIM but do not have an M-PESA account, and, finally, have an account but do not save on it. We find that those who are left behind are predominantly those who would benefit most from formal saving, namely the poor, the non-educated, and, in the final step, also women.
    Keywords: Kenya, mobile financial services,financial inclusion, saving, M-PESA
    Date: 2017–04–26
  11. By: Manjesh K. Hanawal; Shashank Mishra; Yezekael Hayel
    Abstract: The ongoing net neutrality debate has generated a lot of heated discussions on whether or not monetary interactions should be regulated between content and access providers. Among the several topics discussed, `differential pricing' has recently received attention due to `zero-rating' platforms proposed by some service providers. In the differential pricing scheme, Internet Service Providers (ISPs) can exempt data traffic charges for accessing content from certain CPs or applications (zero-rated) and apply regular charges for accessing content from other CPs. This allows the possibility for Content Providers (CPs) to make `sponsorship' agreements to zero-rate their content and attract more user traffic. In this paper, we study the effect of differential pricing on various players in the Internet. We consider a model with a single ISP and multiple CPs where users select CPs based on the quality of service (QoS) and applicable traffic charges. We show that in a differential pricing regime 1) a CP offering low QoS can make more revenues than a CP offering better QoS through sponsorships. 2) QoS (mean delay) for end users can degrade compared to the case where no differential pricing is allowed.
    Date: 2017–09
  12. By: Saul Estrin; Daniel Gozman; Susanna Khavul
    Abstract: Equity crowdfunding (ECF) offers founders of new ventures an online social media marketplace where they can access a large number of investors who, in exchange for an ownership stake, provide finance for business opportunities that they find attractive. In this paper, we first quantify the evolution of the ECF market in the UK, the world leader, as well as the benign regulatory environment. ECF already represents more than 15% of British early stage entrepreneurial finance. We then use qualitative methods to explore three research questions. First, do these large financial flows via ECF platforms supplement or merely divert more traditional forms of funding for entrepreneurs? Second, do investors understand and appropriately evaluate the risks that they are bearing by investing in this new asset class? Finally, does ECF finance bring with it the spillovers, e.g. advice and guidance critical to entrepreneurial success, associated with other sources of funding such as Venture Capital? Our study is based on extensive interviews with investors, entrepreneurs (including some who chose not to use ECF in favour of traditional funding sources) and regulators. We conclude that ECF provides real additionality to the sources of entrepreneurial finance while not bringing major new risks for investors. This suggests other jurisdictions might consider implementing the British "principles based" regulatory framework.
    Keywords: equity crowdfunding, early stage entrepreneurial finance, financial regulation, investor choices
    JEL: G3 G21 L26 M21
    Date: 2017–09
  13. By: Aurelio F. Bariviera
    Abstract: This letter revisits the informational efficiency of the Bitcoin market. In particular we analyze the time-varying behavior of long memory of returns on Bitcoin and volatility 2011 until 2017, using the Hurst exponent. Our results are twofold. First, R/S method is prone to detect long memory, whereas DFA method can discriminate more precisely variations in informational efficiency across time. Second, daily returns exhibit persistent behavior in the first half of the period under study, whereas its behavior is more informational efficient since 2014. Finally, price volatility, measured as the logarithmic difference between intraday high and low prices exhibits long memory during all the period. This reflects a different underlying dynamic process generating the prices and volatility.
    Date: 2017–09
  14. By: Neil Stewart; Jesse Chandler; Gabriele Paolacci
    Abstract: Crowdsourcing data collection from research participants recruited from online labor markets is now common in cognitive science.
    Keywords: Crowdsourcing Samples, cognitive science
    JEL: J
  15. By: Valentino Larcinese; Luke Miner
    Abstract: What are the political consequences of the diffusion of broadband internet? We address this question by studying the 2008 US presidential election, the first political campaign where the internet played a key role. Drawing on data from the FEC and the FCC, we provide robust evidence that internet penetration in US counties is associated with an increase in turnout, an increase in campaign contributions to the Democrats and an increase in the share of Democratic vote. We then propose an IV strategy to deal with potential endogeneity concerns: we exploit geographic discontinuities along state borders with different right-of-way laws, which constitute the main determinant of the cost of building new infrastructure. IV estimates confirm a positive impact of broadband diffusion on turnout, while the pro-Democratic Party effect of the internet appears to be less robust.
    Keywords: internet diffusion, political economy of the media, United States elections, turnout, campaign contributions
    JEL: D72 L86
    Date: 2017–06
  16. By: Deniss Sceulovs (Riga Technical University, Latvia. Author-2-Name: Vladimir Shatrevich Author-2-Workplace-Name: Riga Technical University, Latvia. Author-3-Name: Elina Gaile-Sarkane Author-3-Workplace-Name: Riga Technical University, Latvia.)
    Abstract: "Objective – Modern e-businesses are developing rapidly as new modern enterprises; e-business management is an important topic across contemporary management and modern information technology. The purpose of the paper is to investigate e-recruitment based on Business Model Ontology framework, to provide useful implication of e-recruitment as a business model. The aim is to create a usable model for building company’s value added through e-business, helping companies to evaluate contribution of each element added to the model. Methodology/Technique – The research done by reviewing previous studies in related areas. Findings – E-recruitment`s effect on initial job-seeker interest is limited, decreasing the potential possibility to attract a job-seeker and receive positive feedback. Information interaction plays a certain role in job seeker's attitude and job acceptance decisions, but the motivation-enhancing possibilities are likely to be less effective than traditional ones Novelty – The proposed model of study will provide a practical framework for business users."
    Keywords: "E-Recruitment; Internet of Things; E-Business; Business Model Ontology; Value Creation; Information and Communication Technology."
    JEL: M15 M51 D83
    Date: 2017–09–20
  17. By: Xiao CHEN (Department of Finance, Jinan University, Guangzhou 510630, China.); Bihong HUANG (Asian Development Bank Institute, Kasumigaseki Building 8F, 3-2-5 Kasumigaseki, Chiyoda-ku, Tokyo 100-6008, Japan.); Dezhu YE (Department of Finance, Research Institute of Finance, Jinan University, Guangzhou 510630, China.)
    Abstract: This paper investigates the role of punctuation in the peer-to-peer (P2P) lending market. Using data from Renrendai, one of the largest P2P lending platforms in China, we investigate how the amount of punctuation used in loan descriptions influences the funding probability, borrowing rate, and default. The empirical evidence shows that the amount of punctuation is negatively associated with the funding probability and borrowing rate. We propose that the usage of punctuation affects the readability of a loan description and reflects borrowers’ self-control and cognitive ability. Within a given number of words, excessive usage of punctuation makes loan description informal and reduces the readability of the text, thereby impairing investors’ trust in borrowers. Moreover, borrowers that overuse punctuation may have lower ability of self-control, and tend to underestimate the risk of borrowing and offer lower borrowing rate due to overconfidence.
    Keywords: P2P lending; information asymmetry; word; punctuation
    JEL: G10 G11 G14 G20 G23 G29
    Date: 2017–07
  18. By: Nordine Benkeltoum (LM2O - Laboratoire de Modélisation et de Management des Organisations - Ecole Centrale de Lille)
    Abstract: Information Systems (IS) literature shows a huge interest for open source technologies as well as from IT (Information Technology) strategies, business models or organization. Nevertheless, research on the application of open source in safety-critical information systems is particularly scant. By means of an exploratory study, this article describes the reasons why Thales, a firm specialized in safety-critical fields (defense, aircraft industry and security), has adopted open source software technologies. From a theoretical perspective, this articles relies on the technology, organization, environment (TOE) framework and the literature on technology and innovation adoption. This research suggests a model of barriers and motivations to open source software adoption for safety-critical information systems design.
    Abstract: La littérature en systèmes d'information (SI) s'est largement intéressée aux technologies open source tant du point du vue des stratégies technologiques, des modèles d'affaires que des organisations. Toutefois, les travaux en management des SI se sont peu penchés sur l'utilisation de l'open source dans le domaine des systèmes d'information critiques. En s'appuyant sur une étude exploratoire, cet article décrit les raisons pour lesquelles Thales, une entreprise spécialisée dans des domaines hautement sensibles (défense, aéronautique et sécurité), a adopté les technologies open source à la fois en interne et pour ses clients. D'un point de vue théorique, cet article s'appuie sur le cadre technologie, organisation, environnement (TOE) ainsi que la littérature sur l'adoption des technologies et de l'innovation. La recherche contribue à la littérature en proposant une modélisation des principaux freins et motivations à l'adoption de l'open source pour la conception de systèmes d'information critiques. Mots clés : Open source, adoption de l'innovation, système d'information critique, TOE
    Keywords: open source software, innovation adoption, mission-critical, safety-critical, TOE,open source, adoption de l’innovation, système d’information critique
    Date: 2016
  19. By: Tristan Dissaux (TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet [Saint-Etienne] - Institut d'Études Politiques [IEP] - Lyon - CNRS - Centre National de la Recherche Scientifique); Camille Meyer (Centre Emile Bernheim - ULB - Université Libre de Bruxelles [Bruxelles] - SBS-EM)
    Abstract: La microfinance a acquis, depuis sa large diffusion au milieu des années 1990, une place importante dans les stratégies de réduction de la pauvreté. La dernière décennie a néanmoins vu la portée de sa principale technique financière, le microcrédit, relativisée voire remise en cause. Celui-ci souffrirait en effet d’un certain nombre de limites et, dans certains cas, pourrait même être dommageable à ceux qui sont censés en bénéficier. Après un état des lieux de la microfinance au Brésil et avoir rappelé les limites de l’outil microcrédit, nous nous intéresserons à une adaptation particulière du modèle microfinancier, celle mise en œuvre par les banques communautaires de développement brésiliennes, dont on en compte aujourd’hui plus d’une centaine sur l’ensemble du territoire. Une des principales innovations de ces organisations de la société civile est de coupler le microcrédit à l’émission d’une monnaie sociale, dont l’usage – en complément du réal brésilien – est circonscrit au territoire local. Nous verrons ce qu’apportent ces monnaies et dans quelle mesure elles viennent répondre à certaines des limites du microcrédit, à travers l’exemple de la Banque Palmas, fondatrice de ce modèle de finance solidaire. Non seulement outils économiques mais surtout constructions sociales, ces monnaies participent à un développement endogène et peuvent être le vecteur d’une coconstruction des politiques de réduction de la pauvreté.
    Keywords: Brésil, monnaies sociales, banques communautaires de développement,microfinance
    Date: 2016
  20. By: Donald R. Davis; Jonathan I. Dingel; Joan Monras; Eduardo Morales
    Abstract: We provide measures of ethnic and racial segregation in urban consumption. Using Yelp reviews, we estimate how spatial and social frictions influence restaurant visits within New York City. Transit time plays a first-order role in consumption choices, so consumption segregation partly reflects residential segregation. Social frictions also have a large impact on restaurant choices: individuals are less likely to visit venues in neighborhoods demographically different from their own. While spatial and social frictions jointly produce significant levels of consumption segregation, we find that restaurant consumption in New York City is only about half as segregated as residences. Consumption segregation owes more to social than spatial frictions.
    JEL: D12 J15 L83 R2
    Date: 2017–09

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