nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2018‒01‒15
24 papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. The role of mobile phones in governance-driven technology exports in Sub-Saharan Africa By Asongu, Simplice; Asongu, Ndemaze
  2. Blockchain Publique versus Blockchain Privée : Enjeux et Limites By Dominique Guegan
  3. The Impact of Digital Technologies on Worker Tasks: Do Labor Policies Matter? By Almeida, Rita K.; Corseuil, Carlos Henrique; Poole, Jennifer P.
  4. Credit Card Landscape Update By Herbst-Murphy, Susan
  5. Platform Competition: Who Benefits from Multihoming? By Belleflamme, Paul; Peitz, Martin
  6. Optimal data collection for randomized control trials By Pedro Carneiro; Sokbae Lee; Daniel Wilhelm
  7. Credit card utilization and consumption over the life cycle and business cycle By Fulford, Scott L.; Schuh, Scott
  8. Cities and the Structure of Social Interactions: Evidence from Mobile Phone Data By Büchel, Konstantin; Ehrlich, Maximilian v.
  9. ICT, Openness and CO2 emissions in Africa By Simplice Asongu
  10. DAZIO: detecting activity zones based on input/output call and SMS activity By Miguel Núñez del Prado; Ana Luna; Romain Gauthier
  11. How Do Individuals Repay Their Debt? The Balance-Matching Heuristic By John Gathergood; Neale Mahoney; Neil Stewart; Joerg Weber
  12. The endogeneity of money and the securitizing system. Beyond shadow banking By Caverzasi, Eugenio; Botta, Alberto; Capelli, Clara
  13. Demonetisation, Social Networks and Social Protection: Insights from Rural Tamil Nadu By Isabelle Guérin; Youna Lanos; Sébastien Michiels; Christophe Jalil Nordman; Govindan Venkatasubramanian
  14. Digitization, Measurement and the Unmeasurable By Bruno S. Frey
  15. Do you want some cash-back? Assessing the demand for a no-claim rebate life-insurance product By Francisco Galarza; Ingo Outes Leonb
  16. L’information sur les prix agricoles par la téléphonie mobile : le cas du Ghana By Julie Subervie; Franck Galtier
  17. An Artificial Neural Network-based Stock Trading System Using Technical Analysis and Big Data Framework By O. B. Sezer; M. Ozbayoglu; E. Dogdu
  18. Travel-chains / mode choice for the taxi of the future By Richard Darbéra
  19. El estado de la manufactura avanzada: competencia entre las plataformas de la Internet industrial By Castillo, Mario
  20. Exploiting Investors Social Network for Stock Prediction in China's Market By Xi Zhang; Jiawei Shi; Di Wang; Binxing Fang
  21. Regulating consumer finance: Do disclosures matter? The case of life insurance. By Halan, Monika; Sane, Renuka
  22. Business-­‐models for the taxi of the future By Richard Darbéra
  23. The Evolution of U.S. Monetary Policy By Hetzel, Robert L.
  24. Corporate payments networks and credit risk rating By Elisa Letizia; Fabrizio Lillo

  1. By: Asongu, Simplice; Asongu, Ndemaze
    Abstract: This study assesses how the mobile phone influences governance to improve information and communication technology (ICT) exports in Sub-Saharan Africa with data from 2000-2012. The empirical evidence is based on Generalised Method of Moments and three main governance concepts are used, namely: (i) institutional (comprising the rule of law and corruption-control); (ii) political (involving political stability/no violence and voice & accountability) and (iii) economic (including regulation quality and government effectiveness) governance. The following findings are established. First, there are positive net effects on ICT goods exports from independent interactions between mobile phones and ‘political stability’ ‘voice and accountability’ and corruption-control. Second, significant net effects are not apparent from independent interactions between mobile phones and government effectiveness, regulation quality and the rule of law. Theoretical and practical implications are discussed.
    Keywords: Knowledge Economy; Development; Africa
    JEL: L59 L98 O10 O30 O55
    Date: 2017–01
  2. By: Dominique Guegan (Centre d'Economie de la Sorbonne and LabEx ReFi)
    Abstract: La blockchain est un sujet très prisé dans le milieu bancaire et de l'assurance, de quoi s'agit-il ? La notion de blockchain émane de la cryptographie et il s'agit d'un protocole permettant de transmettre des informations de manière sécurisée. Nous distinguerons deux approches, l'approche publique décentralisée et l'approche privée centralisée. Le concept de blockchain est apparu grâce à l'émergence de crypto-monnaie et en particulier du Bitcoin. Si la blockchain doit devenir un outil important au sein des banques alors il est nécessaire d'avoir une connaissance assez juste des outils sous-jacents et des enjeux associés à cette nouvelle technologie. En effet, il apparait nécessaire d'identifier les risques qui y sont associés et de proposer des stratégies en vue de les contrôler
    Keywords: Blockchain; Bitcoin; régulation
    JEL: C6 C88
    Date: 2017–06
  3. By: Almeida, Rita K. (World Bank); Corseuil, Carlos Henrique (Institute for Applied Economic Research (IPEA), Brazil); Poole, Jennifer P. (American University)
    Abstract: Between 1999 and 2006, Brazilian cities experienced strong growth in the provision of internet services, driven in part by the privatization of the telecommunications industry. A main concern of policymakers is that digital technology replaces routine, manual tasks, displacing lower-skilled workers. In Brazil, stringent labor market institutions exist to protect workers from such shocks, but by increasing labor costs, labor policy may also constrain firms from adjusting the workforce and fully benefiting from technology adoption. We show that digital technology adoption shifted the demand for skills toward an increased use of non-routine and cognitive tasks. Furthermore, and in contrast with labor policy intentions, we show that de facto labor market regulations differentially benefit the most skilled workers, particularly those workers employed in non-routine and cognitive tasks. Our results point to important changes in the future of labor markets in middle-income settings and warn for distortive and unintended consequences of labor market policies.
    Keywords: labor regulations, skills, digital technology
    JEL: J24 J48 O3 O15
    Date: 2017–11
  4. By: Herbst-Murphy, Susan (Federal Reserve Bank of Philadelphia)
    Abstract: This recap of a January 2017 Payment Cards Center workshop conducted by Frank Martien of First Annapolis Consulting, Inc. (since acquired by and now part of Accenture) adds to the literature on conditions in the markets for consumer and commercial credit cards, and credit and debit cards use by small businesses, at a point some years after the 2007–2009 recession. Some insights are provided as to how the supply and demand sides for these products are operating after this major economic disruption and the enactment of two pieces of legislation affecting payment cards. The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) and the Durbin Amendment, which went into effect in 2010 and 2011, respectively, had implications for the market for payment cards used by consumers and small businesses. Commercial cards used by corporations and government were not affected by these regulations, but there have still been major developments in that product line. Readers will get a glimpse of some of the innovations occurring in commercial cards.
    Keywords: credit and debit cards; small business credit and payments; commercial cards; virtual cards; CARD Act; Durbin Amendment
    JEL: D18 G2 G28
    Date: 2018–01–09
  5. By: Belleflamme, Paul; Peitz, Martin
    Abstract: Competition between two-sided platforms is shaped by the possibility of multihoming. If users on both sides singlehome, each platform provides users on either side exclusive access to its users on the other side. In contrast, if users on one side can multihome, platforms exert monopoly power on that side and compete on the singlehoming side. This paper explores the allocative effects of such a change from single- to multihoming. Our results challenge the conventional wisdom, according to which the possibility of multihoming hurts the side that can multihome, while benefiting the other side. This is not always true: the opposite may happen or both sides may benefit.
    Keywords: competitive bottleneck; multihoming; network effects; platform competition; Two-sided markets
    JEL: D43 L13 L86
    Date: 2017–11
  6. By: Pedro Carneiro (Institute for Fiscal Studies and University College London); Sokbae Lee (Institute for Fiscal Studies and Columbia University and IFS); Daniel Wilhelm (Institute for Fiscal Studies and cemmap and UCL)
    Abstract: In a randomized control trial, the precision of an average treatment effect estimator and the power of the corresponding t-test can be improved either by collecting data on additional individuals, or by collecting additional covariates that predict the outcome variable. We propose the use of pre-experimental data such as other similar studies, a census, or a household survey, to inform the choice of both the sample size and the covariates to be collected. Our procedure seeks to minimize the resulting average treatment effect estimator's mean squared error and/or maximize the corresponding t-test's power, subject to the researcher's budget constraint. We rely on a modi cation of an orthogonal greedy algorithm that is conceptually simple and easy to implement in the presence of a large number of potential covariates, and does not require any tuning parameters. In two empirical applications, we show that our procedure can lead to reductions of up to 58% in the costs of data collection, or improvements of the same magnitude in the precision of the treatment effect estimator.
    Keywords: randomized control trials, big data, data collection, optimal survey design, orthogonal greedy algorithm, survey costs
    Date: 2017–10–23
  7. By: Fulford, Scott L. (Consumer Financial Protection Bureau); Schuh, Scott (Federal Reserve Bank of Boston)
    Abstract: The revolving credit available to consumers changes substantially over the business cycle, life cycle, and for individuals. We show that debt changes at the same time as credit, so credit utilization is remarkably stable. From ages 20–40, for example, credit card limits grow by more than 700 percent, and yet utilization holds steadily at around 50 percent. We estimate a structural model of life-cycle consumption and credit use in which credit cards can be used for payments, precautionary smoothing, and life-cycle smoothing, uniting their monetary and revolving credit functions. Our estimates predict stable utilization closely matching the individual, life-cycle, and business-cycle relationships between credit and debt. The preference heterogeneity implied by the different uses of credit cards drives our results. The revealed preference that some people with credit cards borrow at high interest, while others do not, suggests that around half the population is living nearly hand to mouth.
    Keywords: credit cards; life cycle; consumption; saving; precaution; buffer stock
    JEL: D14 E21 E27
    Date: 2017–09–01
  8. By: Büchel, Konstantin (University of Bern and CRED); Ehrlich, Maximilian v. (‡University of Bern, CAGE, CRED, and CESifo)
    Abstract: Social interactions are considered pivotal to agglomeration economies. We explore a unique dataset on mobile phone calls to examine how distance and population density shape the structure of social interactions. Exploiting an exogenous change in travel times, we find that distance is highly detrimental to interpersonal exchange. We show that, despite distance-related costs, urban residents do not benefit from larger networks when spatial sorting is accounted for. Higher density rather generates a more efficient network in terms of matching and clustering. These differences in network structure capitalize into land prices, corroborating the hypothesis that agglomeration economies operate via network efficiency.Keywords: Economic Geography; Agglomeration Economies; Social Interactions; Network Analysis; Spatial Sorting JEL Classification: R10; R23; D83; D85; Z13.creation-date: 2018
  9. By: Simplice Asongu (Yaoundé/Cameroun)
    Abstract: This study investigates how information and communication technology (ICT) complements globalisation in order to influence CO2 emissions in 44 Sub-Saharan African countries over the period 2000-2012. ICT is measured with internet penetration and mobile phone penetration whereas globalisation is designated in terms of trade and financial openness. The empirical evidence is based on the Generalised Method of Moments. The findings broadly show that ICT can be employed to dampen the potentially negative effect of globalisation on environmental degradation like CO2 emissions. Practical, policy and theoretical implications are discussed.
    Keywords: CO2 emissions; ICT; Economic development; Africa
    JEL: C52 O38 O40 O55 P37
    Date: 2017–05
  10. By: Miguel Núñez del Prado (Universidad del Pacífico); Ana Luna (Universidad del Pacífico); Romain Gauthier (Instersec Labs)
    Abstract: Mobile telecoms operators possess an enormous quantity of data, which could be used to reduce the cost of installing new infrastructure, to provide a better QoS or to plan their infrastructure. Thus, they are concerned to model, understand and predict SMS and calls activity levels in their infrastructures. Besides, SMS and call activities analysis can open new business opportunities for geomarketing as well as trade area analysis. In the present effort, we detected activity zones with a difference of only 0.5 km from the reference activity areas extracted from Geo-tweets. We also used Markov chains to represent and predict SMS and call activity levels, achieving a prediction success rate between 80% and 90%.
    Date: 2016–12
  11. By: John Gathergood; Neale Mahoney; Neil Stewart; Joerg Weber
    Abstract: We study how individuals repay their debt using linked data on multiple credit cards from five major issuers. We find that individuals do not allocate repayments to the higher interest rate card, which would minimize the cost of borrowing. Instead, individuals allocate repayments using a balance-matching heuristic under which the share of repayments on each card is matched to the share of balances on each card. We show that balance matching captures more than half of the predictable variation in repayments, performs substantially better than other models, and is highly persistent within individuals over time. Consistent with these findings, we show that machine learning algorithms attribute the greatest variable importance to balances and the least variable importance to interest rates in predicting repayment behavior.
    JEL: D12 D14 G02 G20
    Date: 2017–12
  12. By: Caverzasi, Eugenio; Botta, Alberto; Capelli, Clara
    Abstract: Financialization is not just a phenomenon regarding the exponential growth of the financial sector with respect to the real side of the economy. This paper aims shedding some light on the nature and the systemic impact of new elements in the financial realm and particularly on the so-called shadow banking through a macroeconomic perspective. Our analysis shows how financial evolutions have had an impact on the monetary system and on the whole economy at multiple levels. It involved the channel through which money enters the economic system, the rise of new financial institutions and activities, the implementation of monetary policies, and the relation between the real and the financial sector. What we are witnessing is not the rise of a shady version of something old whereas the surge of new forms of financial accumulation.
    Keywords: endogenous money; securitization; shadow banking; inequality; financial instability;
    JEL: E12 E42 E44 E51 G21
    Date: 2018–01–09
  13. By: Isabelle Guérin (IRD, CESSMA (Paris, France), IFP (Pondicherry, India)); Youna Lanos (IRD, UMR 225 DIAL, PSL, Université Paris Dauphine, LEDa); Sébastien Michiels (IRD, UMR 225 DIAL, PSL, Université Paris Dauphine, LEDa, IFP (Pondicherry, India)); Christophe Jalil Nordman (IRD, UMR 225 DIAL, PSL, Université Paris Dauphine, LEDa, IFP (Pondicherry, India)); Govindan Venkatasubramanian (IFP (Pondicherry, India))
    Abstract: The demonetisation that took place in India in November 2016 caused an unprecedented shock. Among its other objectives, the measure was championed as an efficient means to promote a less-cash economy, in order to formalise economic transactions and boost social protection. This paper draws on ground-breaking data from rural South India to voice serious reservations over those stated goals. In the short run, the importance of cash in the Indian economy resulted in this measure strongly affecting employment, daily financial practices, and social network use for over three months. People came to rely more strongly on their networks to sustain their economic and social activities. Demonetisation has not fought, but has largely strengthened the informal economy. It has also probably further marginalised those without supportive networks. In a context such as India, where state social protection is weak and governmental schemes are notoriously subject to patronage and clientelistic networks, dense networks of supportive relatives, friends and patrons remain key for safeguarding daily life and the future. It can only be counterproductive to eliminate such arrangements without offering alternative protection. With cashless policies flourishing in various parts of the world, we believe our findings have major implications, seriously questioning their merit, especially among the most marginalised segments of the population.
    Keywords: Demonetisation, Digitalisation, Social Regulation, Social Networks, Tamil Nadu, Caste and Gender Segmentation,
    JEL: J16 J24 J31 J71 C21 O12
    Date: 2017–10
  14. By: Bruno S. Frey
    Abstract: Research in the field of “Digital Economics” has widely neglected the dynamics of changes in preference and demand due to the exploding quantification of human life. This paper examines reactions to the rapidly expanding digital measurement of individual and societal factors. The reactions “Government Regulation”, “Flooding”, “Passive Escape: Digital Detox” and “Active Escape” are analyzed.
    Keywords: digital economics, quantification of life, the unmeasurable, government regulation, Digital Detox, offline, nature
    JEL: O30
    Date: 2018
  15. By: Francisco Galarza (Universidad del Pacífico); Ingo Outes Leonb (University of Oxford)
    Abstract: We designed and implemented a field experiment in rural Peru, in order to examine the sensitivity of the demand for micro life-insurance products to the introduction of rebates (cash-backs), which are partial refunds of the insurance premium when no insured event occurs. We find that cash-backs do appear to create higher levels of trust between the insurer and the insurance policy holder, thus offering the promise to increase the demand for insurance. This result suggests that cash-backs can be an attractive product innovation in developing countries.
    Keywords: Cash-back, life micro-insurance, experimental economics
    Date: 2016–06
  16. By: Julie Subervie (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Franck Galtier (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - CIHEAM - Centre International des Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier, Centre de Coopération Internationale en Recherche Agronomique pour le Développement)
    Abstract: L’information sur les prix agricoles par la téléphonie mobile : le cas du Ghana
    Abstract: Dans beaucoup de pays d’Afrique subsaharienne, les petits producteurs sont souvent confrontés au choix de vendre leurs produits à des commerçants itinérants plutôt que de se rendre eux-mêmes sur le marché. En raison de l’isolement de certains villages en zone rurale et de la mauvaise qualité du réseau routier, les producteurs ont généralement une connaissance très incertaine des prix du marché et les commerçants peuvent profiter de cette situation en offrant des prix très peu élevés aux producteurs. L’émergence de la téléphonie mobile est susceptible de modifier le pouvoir de négociation des producteurs de zone rurale car elle permet l’apparition de nouveaux systèmes d’information de marché (SIM). La question de l’impact de l’information sur les prix des transactions réalisées bord champ se trouve donc à nouveau au cœur de la relation qui lie les producteurs aux commerçants itinérants. Des chercheurs de l’Unité mixte de recherche « Marchés, organisations, institutions et stratégies d'acteurs » (UMR Moisa) ont bénéficié d’un financement de l’Agence Française de Développement (AFD) et du Centre technique de coopération agricole et rurale (CTA) pour mener une enquête auprès de groupes de producteurs ghanéens qui ont participé à un programme-pilote les faisant bénéficier d’une information continue sur les prix de marché via le SIM Esoko-Ghana. Ils ont pu estimer l’impact du SIM Esoko sur les performances commerciales des producteurs participants. Leurs résultats suggèrent un effet significatif du SIM sur le prix de vente moyen : un gain de 12,7 % en moyenne pour le maïs et de 9,7 % en moyenne pour l’arachide.
    Keywords: agricultural price,prix agricole,marché agricole,communication,téléphone,accès à l'information,ghana
    Date: 2017–09–26
  17. By: O. B. Sezer; M. Ozbayoglu; E. Dogdu
    Abstract: In this paper, a neural network-based stock price prediction and trading system using technical analysis indicators is presented. The model developed first converts the financial time series data into a series of buy-sell-hold trigger signals using the most commonly preferred technical analysis indicators. Then, a Multilayer Perceptron (MLP) artificial neural network (ANN) model is trained in the learning stage on the daily stock prices between 1997 and 2007 for all of the Dow30 stocks. Apache Spark big data framework is used in the training stage. The trained model is then tested with data from 2007 to 2017. The results indicate that by choosing the most appropriate technical indicators, the neural network model can achieve comparable results against the Buy and Hold strategy in most of the cases. Furthermore, fine tuning the technical indicators and/or optimization strategy can enhance the overall trading performance.
    Date: 2017–12
  18. By: Richard Darbéra (LATTS - Laboratoire Techniques, Territoires et Sociétés - UPEM - Université Paris-Est Marne-la-Vallée - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Date: 2017–08–25
  19. By: Castillo, Mario
    Abstract: En este documento se presenta una descripción de la situación de la manufactura avanzada, se propone un modelo de análisis de la Internet Industrial y se evalúan tres hipótesis en torno al ecosistema de la manufactura avanzada: la primera, la híper convergencia entre la manufactura y los servicios; la segunda, la mayor fragmentación de la cadena de valor de la Internet Industrial; y la tercera, la competencia de las nuevas plataformas de Internet Industrial.
    Date: 2017–12–27
  20. By: Xi Zhang; Jiawei Shi; Di Wang; Binxing Fang
    Abstract: Recent works have shown that social media platforms are able to influence the trends of stock price movements. However, existing works have majorly focused on the U.S. stock market and lacked attention to certain emerging countries such as China, where retail investors dominate the market. In this regard, as retail investors are prone to be influenced by news or other social media, psychological and behavioral features extracted from social media platforms are thought to well predict stock price movements in the China's market. Recent advances in the investor social network in China enables the extraction of such features from web-scale data. In this paper, on the basis of tweets from Xueqiu, a popular Chinese Twitter-like social platform specialized for investors, we analyze features with regard to collective sentiment and perception on stock relatedness and predict stock price movements by employing nonlinear models. The features of interest prove to be effective in our experiments.
    Date: 2018–01
  21. By: Halan, Monika (Editor, Mint, Delhi); Sane, Renuka (National Institute of Public Finance and Policy)
    Abstract: We use a sample-survey based experiment to estimate the effect of simplified life insurance disclosures. We randomise survey respondents into one of four product advertisements: 1) a baseline product with no additional disclosure, 2) disclosure of the actual rate of return on the product, 3) disclosure of the rate of return and a benchmark return of a similar product, and 4) the rate of return, benchmark return and product features of a more cost-effective competing product. We test if these incremental disclosures affect customer views of the product, and the intention to purchase. We find that relative to the baseline treatment, only Treatment 2, had an effect on product perceptions. Treatments which show additional data did not have a differential effect relative to the baseline treatment. None of the treatments had any impact on the intention to purchase.
    Date: 2017–11
  22. By: Richard Darbéra (LATTS - Laboratoire Techniques, Territoires et Sociétés - UPEM - Université Paris-Est Marne-la-Vallée - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Date: 2017–08–25
  23. By: Hetzel, Robert L. (Federal Reserve Bank of Richmond)
    Abstract: Since the establishment of the Federal Reserve System in 1913, policymakers have always pursued the goal of economic stability. At the same time, their understanding of the world and of the role of monetary policy has changed dramatically. This evolution of views provides a laboratory for understanding what kinds of monetary policy stabilize the economy and what kinds destabilize it.
    Keywords: federal reserve; monetary policy
    JEL: E52 E58
    Date: 2018–01–03
  24. By: Elisa Letizia; Fabrizio Lillo
    Abstract: Understanding the structure of interactions between corporate firms is critical to identify risk concentration and the possible pathways of propagation of financial distress. In this paper we consider the in- teraction due to payments and, by investigating a large proprietary dataset of Italian firms, we characterize the topological properties of the payment network. We then focus on the relation between the net- work of payments and the risk of firms. We show the existence of an homophily of risk, i.e. the tendency of firms with similar risk pro- file to be statistically more connected among themselves. This effect is observed both when considering pairs of firms and when consider- ing communities or hierarchies identified in the network. By applying machine learning techniques, we leverage this knowledge to show that network properties of a node can be used to predict the missing rating of a firm. Our results suggest that risk assessment should take quan- titatively into account also the network of interactions among firms.
    Date: 2017–11

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