nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2018‒02‒05
eighteen papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. Blockchain Technology - An Instrument of Economic Evolution? By Hegadekatti, Kartik
  2. The Right to Money as the Fundamental Right of Individuals in the Coming Digital Economy By Hegadekatti, Kartik
  3. Measuring the “Free” Digital Economy within the GDP and Productivity Accounts By Leonard Nakamura; Jon Samuels; Rachel Soloveichik
  4. The K-Y Paradox: Problems in Creating a Centralised Sovereign Backed Cryptocurrency on a Decentralised Platform By Hegadekatti, Kartik
  5. Privacy and Platform Competition By Dimakopoulos, Philipp; Sudaric, Slobodan
  6. Crowding out in a Dual Currency Regime? Digital versus Fiat Currency By KiHoon Hong; Kyounghoon Park; Jongmin Yu
  7. The Effect of Personality Traits on Online Privacy Concern By Bruno Skrinjaric; Jelena Budak; Mateo Zokalj
  8. The Programmable Economy: Envisaging an Entire Planned Economic System as a Single Computer through Blockchain Networks By Hegadekatti, Kartik; S G, Yatish
  9. CryptoRuble: From Russia with Love By Zura Kakushadze; Jim Kyung-Soo Liew
  10. Blockchains and Extra-Terrestrial Nations: Role of Blockchains in the Socio-Political Milieu of Future Extra-Terrestrial Settlements By Hegadekatti, Kartik
  11. Las TIC en los créditos al consumo: el caso de la adaptación de una empresa financiera marplatense a la nueva economía By Fraschina, Luciano Pablo
  12. Towards Regional Monetary Unions through Blockchain Networks By Hegadekatti, Kartik
  13. Do-it-yourself digital: the production boundary and the productivity puzzle By Diane Coyle
  14. Improved Matching, Directed Search, and Bargaining in the Credit Card Market By Gajendran Raveendranathan
  15. Policy Uncertainty and the Demand for Money in Australia: An Asymmetry Analysis By BAHMANI-OSKOOEE, Mohsen; Maki Nayeri, Majid
  16. Estrategias digitales de proveedores de servicios turísticos ante nuevas tendencias de consumo de información By Zanfrillo, Alicia Inés; Artola, María Antonia; Marisquerena, Sergio Ezequiel
  17. Señales ofrecidas a través de los recursos de internet para reducir la incertidumbre de los consumidores de servicios de hospedaje By Zanfrillo, Alicia Inés; Artola, María Antonia
  18. Do banks and microfinance institutions compete? Microevidence from Madagascar By Pierrick Baraton; Florian LEON

  1. By: Hegadekatti, Kartik
    Abstract: Man has not only evolved biologically and culturally but also economically. Human economy has grown over many centuries through continuous addition of value. This value addition has been an evolutionary factor as it has influenced the formation of the main economic sectors-namely Primary, Secondary and Tertiary. Recently after the advent of Blockchain technology, Bitcoin achieved Gold parity. This paper analyses whether such an event will have any impact on the evolution of our economies. First, I discuss the various sectors of the economy. Then I evaluate how Bitcoin (BTC) achieving Gold Parity (GP) may influence the outcome of future economic scenarios. The paper concludes by summarizing the importance of technology in our economic systems and how technology affects its evolution.
    Keywords: blockchain, economic evolution, bitcoin, K-Y protocol
    JEL: B52 O32 O33 Q55
    Date: 2017–03–31
  2. By: Hegadekatti, Kartik
    Abstract: Poverty has been a common feature in all human societies since the dawn of civilization. Purchasing power of an individual decides her standard of living. In many cases, it even decides whether a person can live or not (eg: in starvation or malnourishment, victims have no purchasing power to buy calories). As such, the Right to Life philosophy of many National Constitutions comes to naught if the state cannot ensure adequate purchasing power for its people. Thus, an individual should have Right to Money in order to live with respect and dignity. In this paper, we will explore the concept of the Right to Money and how it is linked to the Right to Life. We will see how the Right to Money concept can ensure a continued economic expansion even in a scenario when automation has reached a critical point (i.e Technological Singularity). Right to Money can also ensure continued human dominance over Machine Intelligence as and when they arise. Interestingly the Right to Money leads to another advanced concept – The Right to Machines which will make certain that there is continued synergy between human and artificial intelligence in future and that the Human race stays relevant. The paper concludes as to how human society can be best prepared economically (or otherwise) for a Post-Technological Singularity scenario.
    Keywords: Right to Life, Economic Right, Money, Life
    JEL: D31 H55 O32 O33 P24 P36 P48 Q55
    Date: 2017–04–23
  3. By: Leonard Nakamura; Jon Samuels; Rachel Soloveichik
    Abstract: We develop an experimental methodology that values ”free” digital content through the lens of a production account and is consistent with the framework of the national accounts. We build upon the work in Nakamura, et al. (2016) by combining marketing‐ and advertising‐supported content and find that the impact of ”free” digital content on U.S. gross domestic product (GDP) has accelerated in recent years, particularly since 2005. However, the explosion in ”free” digital content is partially offset by a decrease in ”free” print content like newspapers. Including these, real GDP growth would grow at 1.53 percent a year from 2005 to 2015 rather than the official growth rate of 1.42 percent, a tenth of a percent faster. Thus, there is a substantive impact on 2005 to 2015 real growth, even when we do not measure the full consumer surplus benefits of free goods. In addition, from 1995 to 2005, real GDP growth, including ”free” content, would grow 0.07 percentage point faster, and in the earlier period, from 1929 to 1995, 0.01 percentage point faster. We further find that the personal consumption expenditures (PCE) and core PCE deflators would have risen about 0.1 percentage point slower from 2005 to 2015. To analyze the impact of ”free” content on measured private business total factor productivity (TFP) growth, we account for inputs of ”free” content used in production. We find that TFP would grow faster by 0.07 percentage point per year from 2005 to 2014 and faster by 0.07 percentage point from 1995 to 2005.
    Keywords: Internet, productivity, advertising, marketing, measurement, GDP
    JEL: C82 L81 M37 O3
    Date: 2017–12
  4. By: Hegadekatti, Kartik
    Abstract: Cryptocurrency networks and Blockchains are decentralized systems, functioning on distributed consensus. Fiat currencies on the other hand are issued, maintained and supervised by a sovereign central authority. RSBCs are Regulated And Sovereign Backed Cryptocurrencies (based on the K-Y Protocol) i.e. they are essentially decentralized cryptocurrencies floated by a central (sovereign) authority; it presents a paradox; known as the K-Y paradox. This paper explores the various dimensions of the K-Y paradox and its resolution.
    Keywords: K-Y Protocol, blockchain, cryptocurrency, bitcoin
    JEL: C88 D02 E42 E51 E52
    Date: 2017–03–29
  5. By: Dimakopoulos, Philipp (Humboldt University Berlin); Sudaric, Slobodan (Humboldt University Berlin)
    Abstract: We analyze platform competition where user data is collected to improve adtargeting. Considering that users incur privacy costs, we show that the equilibrium level of data provision is distorted and can be inefficiently high or low: if overall competition is weak or if targeting benefits are low, too much private data is collected, and vice-versa. Further, we find that softer competition on either market side leads to more data collection, which implies substitutability between competition policy measures on both market sides. Moreover, if platforms engage in two-sided pricing, data provision is efficient.
    Keywords: ad targeting; platform competition; privacy; user data;
    JEL: D43 L13 L40 L86
    Date: 2018–01–22
  6. By: KiHoon Hong (College of Business, Hongik University); Kyounghoon Park (Economic Research Institute, The Bank of Korea); Jongmin Yu (School of Economics, Hongik University)
    Abstract: In this paper, we analyse a dual currency regime with fiat currency and digital currency and investigate potential crowding-out effects of fiat currency or digital currency under the framework of the traditional monetary economic model. We find that crowding out only occurs under extreme assumptions, i.e. extremely high costs associated with the use (medium of exchange and store of value) of one currency and extremely low costs associated with the use of the other currency.
    Keywords: Bitcoin, Digital currency, Dual currency, Crowding out
    JEL: E00 E41 E42
    Date: 2017–04–24
  7. By: Bruno Skrinjaric (The Institute of Economics, Zagreb); Jelena Budak (The Institute of Economics, Zagreb); Mateo Zokalj (University of Zagreb, Faculty of Economics and Business)
    Abstract: This paper examines personality traits as antecedents of online privacy concern. The aim of the research is to analyze if and how personal characteristics of Internet users affect their concern for privacy. The theoretical framework consisting of the Big Five theory of personality traits has been used to test the variations in online privacy concern. The model includes a range of other variables that might affect online privacy concern, such as sociodemographic factors, cultural values and computer literacy. The empirical analysis is based on survey data collected in 2016 on a large sample of 2,060 Internet users in Croatia. Results of both OLS and ordered probit estimations show that two personality trait dimensions, namely extraversion and neuroticism, significantly determine the level of online privacy concern. The more extraverted, i.e., more energetic and outgoing Internet user is less concerned about his/her online privacy, whilst the more neurotic one is more concerned. Privacy awareness, computer anxiety and previous (negative) experience were also observed as antecedents, all positively affecting the level of privacy concern of Internet users. The results of this research fill the gap in the underexplored area of personality traits and online privacy concern literature.
    Keywords: privacy concern, Internet, personality traits, survey
    JEL: A13 Z13
    Date: 2017–04
  8. By: Hegadekatti, Kartik; S G, Yatish
    Abstract: Since the dawn of the concept of nation-states, many nations have been planning their economies to increase people’s prosperity and standard of living. All economies have a centralized feature where decisions are taken. But data collection and plan implementation has been cumbersome because of the manual nature of economic planning. Centralized systems, even when digitized, are prone to single point failures. Controlled Blockchains allow for an economic system to be decentralized, yet having central supervision i.e. quasi-decentralization. This paper deals with shifting a national economy to a network of Blockchains and creating a Programmable Economy (P.E) where the whole economic system behaves like a single computer, taking in certain inputs and providing the desired outputs. We discuss the various factors that are needed to bring about such a transformation. We also analyse the impact this will have on various aspects of the economy and people’s lives. Finally the paper concludes by summarizing the purpose, methodology and impact of a Programmable Economy (P.E).
    Keywords: blockchain, K-Y Protocol, planned economy, bitcoin
    JEL: C53 C63 C81 C82 C87 D04 D72 D78 D81 E27 E37 E47 E61 F17 F37 F47
    Date: 2017–03–30
  9. By: Zura Kakushadze; Jim Kyung-Soo Liew
    Abstract: We discuss Russia's underlying motives for issuing its government-backed cryptocurrency, CryptoRuble, and the implications thereof and of other likely-soon-forthcoming government-issued cryptocurrencies to some stakeholders (populace, governments, economy, finance, etc.), existing decentralized cryptocurrencies (such as Bitcoin and Ethereum), as well as the future of the world monetary system (the role of the U.S. therein and a necessity for the U.S. to issue CryptoDollar), including a future algorithmic universal world currency that may also emerge. We further provide a comprehensive list of references on cryptocurrencies.
    Date: 2018–01
  10. By: Hegadekatti, Kartik
    Abstract: Humanity is on the cusp of a great wave of space exploration and colonization of Extra-Terrestrial Bodies (ETB). This paper deals with the socio–political issues that may arise between Earth and E.T Settlements and the possible ways to resolve them. Firstly we discuss as to how early maritime explorations compare to present day space voyages. Based on the lessons learnt, we will analyse the socio–political relation between Earth and Extra-Terrestrial Settlements (ETS) and how some possibilities of conflicts can arise. We then evaluate as to how Blockchain systems can potentially keep earth and ETS tethered to each other and provide a way for harmonious co-existence. The paper concludes by summarizing the possible Socio–Political and Economic conflicts between Earth and future ETS and ways to resolve them.
    Keywords: space exploration, mars mission, moon mission, astronomy, science
    JEL: D72 E52 F33 F51 F52 F53 F54 F55 F59 G18 G21 O38 P48
    Date: 2017–04–01
  11. By: Fraschina, Luciano Pablo
    Abstract: Las tecnologías de la información y comunicación (TIC) han generado profundos cambios en nuestra sociedad, produciendo una gran transformación en la gestión empresarial y abriendo nuevos desafíos de cara a un futuro incierto. La influencia de las TIC provoca alteraciones tanto en las estructuras de las empresas como en sus integrantes. Si bien existe un consenso de distintos autores sobre las numerosas ventajas que proporcionan las TIC aplicadas al ámbito empresarial, también plantean desafíos ante nuevos mercados más competitivos con cambios continuos y significativos. El objetivo de la presente investigación es analizar el desempeño de los nuevos canales de comercialización implementados en una empresa financiera de Mar del Plata a partir de la utilización de las TIC. Para ello, se identificarán los atributos que definen la creación, consolidación y crecimiento de la empresa. También se establecerán cuáles son los factores que definen el nuevo modelo de negocio desarrollado. Metodológicamente, se utilizará un método mixto a través de la triangulación de datos cuantitativos y cualitativos. Se concluye que la utilización de las TIC, que surgen con la aparición de la nueva economía digital, permite a la empresa minimizar costos y obtener mejoras en su rentabilidad. De esta manera surge una nueva línea de investigación para ser aplicada a empresas de cualquier sector.
    Keywords: Tecnologías de la Información y las Comunicaciones; Economía Digital; Empresas Financieras;
    Date: 2017–03
  12. By: Hegadekatti, Kartik
    Abstract: The concept of political and economic integration has not progressed beyond the concept of a Nation-state. The primary reason is the trust deficit among citizens in a supra-national entity. We can use Blockchain systems-which are trustless networks-to resolve this issue. We can float a Regional Cryptocurrency (RCC) which can bring about a successful Regional Monetary Unions (RMU) amongst a group of nations in a transparent manner. This paper deals with the idea of realizing a monetary union through Blockchain networks. Firstly I describe the basics of cryptocurrencies and RSBCs. Then we shall evaluate how RMUs have failed due trust deficit among citizens of members of RMU. We then analyse as to how Blockchain networks can be a solution to these problems. The paper concludes by summarizing the difficulties and solutions regarding successful formation of Regional Monetary Unions.
    Keywords: Monetary Union, Common Currency, Trade Agreement, Euro
    JEL: E42 E51 E58 F02 F15 F33 F36 N15 N16 N17
    Date: 2017–04–01
  13. By: Diane Coyle
    Abstract: Part of the debate about the ‘productivity puzzle’ concerns the potential mismeasurement of digital activities. Specific measurement adjustments explored in previous research appear not to make a quantitatively large difference to real GDP or productivity growth estimates. However, although these potential adjustments may be small individually, taken together they could be wide in scope and quantitatively significant. This paper sets out a taxonomy of the range of potential measurement artefacts arising from digital innovations. It also specifically considers digitally-enabled substitutions in activity across the production boundary. I argue that these, along with other substitutions occurring within the production boundary, go beyond the effects of digital considered in earlier research; and may be making a meaningful contribution to the productivity puzzle as measured on existing statistical definitions.
    Keywords: digital, production boundary, productivity
    JEL: E01 C82 O40
    Date: 2017–06
  14. By: Gajendran Raveendranathan
    Abstract: I build a model of revolving credit in which consumers face idiosyncratic earnings risk, and credit card firms direct their search to consumers. Upon a match, they bargain over borrowing limits and borrowing interest rates — fixed for the duration of the match. Using the model, I show that improved matching between consumers and credit card firms, calibrated to match the rise in the population with credit cards, accounts for the rise in revolving credit and consumer bankruptcies in the United States. I also provide empirical evidence consistent with the two key features in my model: directed search and bargaining. The lifetime consumption gains from improved matching are 3.55 percent— substantially larger than those previously estimated by alternative explanations for the rise in revolving credit and consumer bankruptcies (0.03-0.57 percent). Finally, I analyze how the credit card firm’s bargaining power impacts the welfare of introducing stricter bankruptcy laws.
    Keywords: revolving credit, consumer bankruptcy, matching, directed search, bargaining
    JEL: E20 G20
    Date: 2018–01
  15. By: BAHMANI-OSKOOEE, Mohsen; Maki Nayeri, Majid
    Abstract: Previous research considered impacts of monetary and output uncertainty on the demand for money in Australia using a linear model and found that while output volatility has significantly positive effects, money supply volatility does not. Furthermore, predictive power of the linear model was very low. In this paper we use a nonlinear model and a new measure of uncertainty known as policy uncertainty and show that this new measure has significantly long-run asymmetric effects on the demand for money in Australia. Due to nonlinear adjustment of policy uncertainty measure, the new nonlinear model has a very high predictive power. The adjusted R2 moves from 0.30 in the linear model to 0.80 in the nonlinear model.
    Keywords: Money Demand, Australia, Policy Uncertainty, Asymmetry, Nonlinear ARDL
    JEL: E41
    Date: 2017–04–01
  16. By: Zanfrillo, Alicia Inés; Artola, María Antonia; Marisquerena, Sergio Ezequiel
    Abstract: El estudio investiga la provisión de información de marketing para el destino turístico ofrecida por los hoteles de la ciudad de Mar del Plata de categoría superior, tres estrellas y boutique a fin de caracterizar el posicionamiento del sector frente a las búsquedas que realizan los usuarios en la planificación de su viaje. Frente al empleo de los recursos de internet como elementos clave para la creación de expectativas sobre el destino y el amplio crecimiento de las transacciones electrónicas en el país resulta de interés conocer los factores que permiten posicionar el destino turístico durante la planificación del viaje. Se adopta una investigación cuantitativa con una estrategia de análisis de contenido sobre los website de los hoteles. El estudio empírico evidencia una asimétrica difusión de contenidos sobre información general, para viajes de ocio y de negocios, con diferencias según la categoría de hotel que escasamente contribuyen al posicionamiento local.
    Keywords: Internet; Hoteles; Servicios Turísticos; Viajes;
    Date: 2017–08
  17. By: Zanfrillo, Alicia Inés; Artola, María Antonia
    Abstract: El uso creciente de los social media asociado al ingente volumen de contenido generado por los usuarios ha transformado la comercialización del sector hotelero. Los usuarios acceden a información sobre establecimientos y prestaciones provenientes de diversos actores discurriendo en comunidades en línea, plataformas de información y sitios corporativos. Dado el hábito de los usuarios de obtener garantías sobre la seguridad en la contratación o confirmar la calidad de las prestaciones anunciadas antes de efectuar la adquisición del servicio, internet permite a las empresas del sector ofrecer señales para atraer su atención y diferenciar así una propuesta comercial entre la vasta oferta disponible. En el marco de las Teorías de Agencia y de Señales, el propósito del trabajo es analizar el aprovechamiento de los recursos de internet para influir en la decisión de compra de los consumidores a través de la presentación de señales de confianza y calidad en los hoteles de 3, 4, 5 estrellas y boutique de la ciudad de Mar del Plata [República Argentina] durante el año 2016. Se aborda una metodología cuantitativa de tipo descriptiva que muestra una adopción moderada de estas herramientas dificultando la publicación de señales para reducir la incertidumbre en los usuarios.
    Keywords: Internet; Hoteles; Toma de Decisiones; Disposición a Pagar;
    Date: 2017
  18. By: Pierrick Baraton (CERDI, Université d'Auvergne, France); Florian LEON (CREA, Université du Luxembourg)
    Abstract: In recent years, both microfinance institutions (MFIs) and banks across the world have been converging towards the financing of small enterprises with high financing needs. This paper scrutinizes whether banks and MFIs compete each other as a result of recent transfor- mations in both industries. In doing so, we study whether the loan strategy of a microfinance institution is shaped by the local presence of a bank. Specifically, we investigate whether bank proximity influences loan conditions provided by one of the largest microfinance institutions in Madagascar. We employ an original panel dataset of 32,374 loans granted to 14,834 borrowers over the period 2008-2014. We find that the closer a bank is located to a given MFI borrower, the larger the loan obtained and the less collateral required. These results are insensitive to several robustness tests for possible endogeneity of distance, sample selection issue, and alter- native specifications. In addition, findings are stronger for larger and more established (older) firms in line with our hypothesis.
    Keywords: Microfinance; Banks; Competition; Loan conditions; Mission drift; Distance
    JEL: G21 O16
    Date: 2018

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