nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2017‒12‒11
thirteen papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. Central Bank Digital Currency: Motivations and Implications By Walter Engert; Ben Fung
  2. Cash Versus Card: Payment Discontinuities and the Burden of Holding Coins By Heng Chen; Kim Huynh; Oz Shy
  3. Improving access to savings through mobile money: Experimental evidence from smallholder farmers in Mozambique By Catia Batista; Pedro Vicente
  4. Mobile banking usage, quality of growth, inequality and poverty in developing countries By Asongu, Simplice A.; Odhiambo, Nicholas M.
  5. Self-Scanning and Self-Control: A Field Experiment on Real-Time Feedback and Shopping Behavior By Montinari, Natalia; Runnemark, Emma; Wengström, Erik
  6. The Role of Openness in the Effect of ICT on Governance By Simplice Asongu; Jacinta Nwachukwu
  7. The evolving role of satellite networks in rural and remote broadband access By OECD
  8. Sweden; Financial Sector Assessment Program-Technical Note-Supervision and Oversight of Financial Market Infrastructures By International Monetary Fund
  9. Introducing the Channel Strategy Model: How to Optimise Value from Third Party Influence By Tony Dyson; Kevin Money
  10. The internet effects on sex crime and murder: Evidence from the broadband internet expansion in Germany By Nolte, André
  11. One Market, One Money – A Mistaken Argument (post factum)? By Gros, Daniel
  12. What twenty years of regulations have to say about M&As of U.S. banks? By Leledakis, George; Mamatzakis, Emmanuel; Pirgiotakis, Manos; Travlos, Nikolaos
  13. BIG data - BIG gains? Empirical evidence on the link between big data analytics and innovation By Niebel, Thomas; Rasel, Fabienne; Viete, Steffen

  1. By: Walter Engert; Ben Fung
    Abstract: The emergence of digital currencies such as Bitcoin and the underlying blockchain and distribution ledger technology have attracted significant attention. These developments have raised the possibility of considerable impacts on the financial system and perhaps the wider economy. This paper addresses the question of whether a central bank should issue digital currency that could be used by the general public. It begins by discussing the possible motivations for a central bank to issue a digital currency. The paper then sets out a benchmark central bank digital currency (CBDC) with features that are similar to cash. The implications of such a digital currency are explored, focusing on central bank seigniorage, monetary policy, the banking system and financial stability, and payments. Finally, a CBDC that differs from the benchmark digital currency in a significant way is considered.
    Keywords: Bank notes, Digital Currencies, Financial services, Payment clearing and settlement systems
    JEL: E E4 E41 E42 E5
    Date: 2017
  2. By: Heng Chen; Kim Huynh; Oz Shy
    Abstract: Cash is the preferred method of payment for small value transactions generally less than $25. We provide insight to this finding with a new theoretical model that characterizes and compares consumers’ costs of paying with cash to paying with cards for each transaction. Our novel method accounts for how much change is received in the form of banknotes and metal coins, assuming that the weight and size of coins are inconvenient to carry. We use the regression discontinuity design (RDD) approach to estimate the model using the 2013 Bank of Canada Method-of-Payments (MOP) Survey and find a significant number of cash users who switch to paying with debit or credit cards at transaction values marginally above $5 and $10. We attribute this finding to the burden of receiving coins as change associated with the currency denomination structure. Our proposed methodology is general and can be applied to other countries and institutional details.
    Keywords: Bank notes, Econometric and statistical methods
    JEL: D03 E42
    Date: 2017
  3. By: Catia Batista; Pedro Vicente
    Abstract: Investment in improved agricultural inputs is infrequent for smallholder farmers in Africa. One barrier may be limited access to formal savings. We designed and conducted a field experiment in rural Mozambique that randomized access to a savings account through mobile money to a sample of smallholder farmers. All subjects were given access to mobile money and information about fertilizer use. We also randomized whether closest farming friends were targeted by the same intervention. We find that the savings account increased savings, the probability of fertilizer use, by 31-36 pp, and the use of other agricultural inputs. We also show that the savings account increased household expenditures, in particular non-frequent ones. Our results suggest that the network intervention decreased social pressure to share resources and that the savings account protected farmers against this network pressure. JEL codes: D14, D85, Q12, Q14
    Keywords: Mobile money, savings, agriculture, smallholder farmers, social networks, field experiment, Mozambique, Africa. Length: 41 pages
    Date: 2017
  4. By: Asongu, Simplice A.; Odhiambo, Nicholas M.
    Abstract: The transition from Millennium Development Goals to Sustainable Development Goals has substantially shifted the policy debate from development to inclusive development. Using interactive quantile regressions, we examine the correlations between mobile banking and inclusive development (quality of growth, inequality and poverty) among individuals in 93 developing countries for the year 2011. Mobile banking entails: ???mobile used to pay bills??? and ???mobile used to receive/send money???. The findings broadly show that increasing mobile banking dynamics to certain thresholds would increase (decrease) quality of growth (inequality) in quantiles at the high-end of inclusive development distributions for the most part. The study is original in that it explores the relationship between mobile banking and inclusive development using three measurements of inclusive development, namely: quality of growth, inequality and poverty. As a main policy implication, encouraging mobile banking applications would play a substantial role in responding to the challenges of immiserizing growth, inequality and poverty in developing countries
    Keywords: Mobile banking; Quality of growth; Poverty; Inequality; Developing countries
    Date: 2017–11
  5. By: Montinari, Natalia (Department of Economics, Bologna University, Italy); Runnemark, Emma (Department of Economics, Lund University); Wengström, Erik (Department of Economics, Lund University)
    Abstract: Payment and checkout at retail stores is increasingly being replaced by automated systems. One recent technological invention in this area is mobile self-scanning in which customers carry a mobile scanner while shopping. Mobile self-scanners give real-time feedback on spending. The device increases price saliency and enables customers to keep track of the total amount spent. Using a field experiment, we test if mobile self-scanning affects shopping behavior. Consumers of two grocery stores were allocated randomly to use a mobile self-scanner or not. Overall, we find that using the self-scanner has a negative but insignificant effect on total amount spent. However, the response to using the scanner is heterogeneous and for customers with low self-control, it significantly reduces both their spending and number of items bought when using the mobile scanner. Moreover, we find that consumers with low self-control are more likely to use the self-scanner than individuals with high self-control. Taken together, our results suggest that sophisticated individuals, that is, individuals who are aware of their self-control problem, use the scanner to control their spending.
    Keywords: Self-scanning; Self-control; Shopping Behavior; Real-time Feedback; Field Experiment
    JEL: D01 D12 M30
    Date: 2017–11–28
  6. By: Simplice Asongu (Yaoundé/Cameroun); Jacinta Nwachukwu (Coventry University, UK)
    Abstract: The study investigates how openness influences information and communication technology (ICT) penetration for improved government quality in sub-Saharan Africa for the period 2000-2012. Openness is measured in terms of trade and financial globalisation whereas ICT is proxied with mobile phone and internet penetration rates. Ten bundled and unbundled governance indicators are used. The empirical evidence is based on Generalised Method of Moments with forward orthogonal deviations. The main findings are: First, financial openness has an edge over trade openness when combined with ICT to affect both economic and institutional governance. Second, mobile phones have an edge over internet penetration in complementing (i) trade openness for economic governance and (ii) financial openness for institutional governance. Third, net effects on political governance are consistently negative. Taken together, in the short-run, openness-driven ICT policies are more rewarding in terms of economic and institutional governance than political governance. Fourth, catch-up in governance is facilitated by the interaction between openness and ICT. Contributions of these findings to literature are discussed.
    Keywords: Openness; ICT; Governance; Africa
    JEL: F40 O38 O40 O55 P37
    Date: 2017–01
  7. By: OECD
    Abstract: Satellites serve as an important option to deliver broadband services to residences and businesses in rural and remote regions throughout the world. In OECD countries, the majority of people live in urban areas or at locations that are closely settled enough to use other broadband access technologies on a cost effective basis. Satellite technology, however, is deploying several significant innovations that result in improved services and may radically change the costs of providing satellite broadband. The purpose of this report is to describe these key recent developments based upon new and anticipated satellite broadband deployments, and discuss their implications for the future use of satellites to deliver broadband services to residential and business users. The report investigates how innovation is changing the role of satellites in extending broadband services to underserved areas in relation to other broadband options and important policy challenges to be considered in light of such innovation.
    Date: 2017–12–04
  8. By: International Monetary Fund
    Abstract: Financial market infrastructures (FMI) in Sweden are well developed, and subject to minimum regulatory requirements established in relevant international standards, the CPMI-IOSCO Principles for Financial Market Infrastructures (PFMI). Domestic critical FMIs include two payment systems (RIX, the Swedish RTGS payments system, and Bankgirot, a retail payments system); one CCP (Nasdaq Clearing); and one CSD and SSS (Euroclear Sweden). Several overseas-based FMIs are also important to financial stability in Sweden, including two CCPs (EuroCCP and LCH.Clearnet Ltd), CLS, a settlement system for foreign exchange transactions, and SWIFT, which provides network and message standards for financial transactions.
    Keywords: Europe;Sweden;
    Date: 2017–10–05
  9. By: Tony Dyson (Tessera Consulting, Switzerland); Kevin Money (Henley Business School, University of Reading)
    Abstract: The importance of third party influence in impacting the reputation and relationships that stakeholders have with organisations is well documented in academic research. However, there is a void in both the study and practice of how such influence affects reputation. This paper sets out to fill this void by presenting the Channel Strategy Model. This model enables us to understand how the networks of influence that operate around key stakeholders affect their behaviour and how this knowledge can be deployed to mobilise networks of influence in the framing of successful communications campaigns. The Channel Strategy Model contributes in three ways to how communications and reputation management have traditionally operated in practice. First, it shifts the approach from companycentric, inside-out communications to stakeholder-centric outside-in communications,thereby understanding stakeholder narratives and perspectives that are outside of the companies’ sphere of experience. Second, it leverages networks and encourages indirect rather than only direct communications. Third, it emphasises the importance of communication as a two-way process and highlights the critical importance of listening as well as broadcasting in building reputation. The paper concludes with a brief outlook on how the Channel Strategy Model can be used to guide stakeholder engagement and communication strategy in a way that allows companies to identify how and with whom they could communicate to create mutual benefit
    Keywords: corporate reputation, corporate communication, influencers, relationships, listening skills, networks of influence, direct and indirect communications
    Date: 2017–07
  10. By: Nolte, André
    Abstract: This paper studies the effects of the introduction of a new mass medium on criminal activity in Germany. The paper asks the question of whether highspeed internet leads to higher/lower sex crime offences and murder. I use unique German data on criminal offences and broadband internet measured at the municipality level to shed light on the question. In order to address endogeneity in broadband internet availability, I follow Falck et al. (2014) and exploit technical peculiarities at the regional level that determine the roll-out of high-speed internet. In contrast to findings for Norway (Bhuller et al., 2013), this paper documents a substitution effect of internet and child sex abuse and no effect on rape incidences. The effects on murder increase under the instrumental variable approach however remain insignificant. Overall, the estimated net effects might stem from indirect effects related to differences in reporting crime, a matching effect, and a direct effect of higher and more intensive exposure to extreme and violent media consumption. After investigating the potential channel, I do find some evidence in favor of a reporting effect suggesting that the direct consumption effect is even stronger. Further investigation of the development of illegal pornographic material suggests that the direct consumption channel does play a significant role in explaining the substitution effect.
    Keywords: Crime,Broadband Internet,Media
    JEL: K42 H40 L96 C26
    Date: 2017
  11. By: Gros, Daniel
    Abstract: Why should Europe opt for monetary union? ‘One Market needs one Money'! This is, at first sight, the key argument of the influential report by the European Commission entitled “One Market, One Money”, published in 1990. But after closer examination of the report, Daniel Gros considers its rather more agnostic subtitle: “An evaluation of the potential benefits and costs of forming an economic and monetary union” and concludes that the key argument was in fact the other way round: one money would create one market. Unfortunately, the authors of 1990 did not recognise that ‘one money’ would foster huge cross-border financial flows that would one day lead to a very costly financial crisis.
    Date: 2017–02
  12. By: Leledakis, George; Mamatzakis, Emmanuel; Pirgiotakis, Manos; Travlos, Nikolaos
    Abstract: We extend the U.S. bank M&As literature by examining announcement returns for acquisitions of both listed and unlisted targets by U.S. banking firms for a long period of time from the eighties till to date. Over these decades there have been implemented several regulation changes, notably the Dodd-Frank Act that would be of interest to examine whether they have any impact, and if indeed they have to which direction, on value creation in M&As in the U.S. banking industry. Contrary to the conventional wisdom that bidding banks lose upon the announcement of a merger, we find positive abnormal returns for these firms that choose to acquire privately-held targets. Further, returns for acquirers in private offers do not depend on the method of payment, legislative changes, size, or geographical scope. However, we find that the use of a financial advisor on the part of the bidder can better explain the variation in abnormal returns for such offers. Our results are not influenced by any unobserved bidder-specific component or sample selection issues.
    Keywords: Mergers and Acquisitions; Regulations, Banks; Value Creation
    JEL: G2 G3 G34
    Date: 2017–11–27
  13. By: Niebel, Thomas; Rasel, Fabienne; Viete, Steffen
    Abstract: This paper analyzes the relationship between firms' use of big data analytics and their innovative performance in terms of product innovations. Since big data technologies provide new data information practices, they create novel decision-making possibilities, which are widely believed to support firms' innovation process. Applying German firm-level data within a knowledge production function framework we find suggestive evidence that big data analytics is a relevant determinant for the likelihood of a firm becoming a product innovator as well as for the market success of product innovations. These results hold for the manufacturing as well as for the service sector but are contingent on firms' investment in IT-specific skills. Subsequent analyses suggest that firms in the manufacturing and service sector rely on different data sources and data-related firm practices in order to reap the benefits of big data. Overall, the results support the view that big data analytics have the potential to enable innovation.
    Keywords: big data,data-driven decision-making,product innovation,firm-level data
    JEL: D22 L20 O33
    Date: 2017

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