nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2018‒04‒02
25 papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. What drives bitcoin adoption by retailers By Nicole Jonker
  2. Inside the Engine Room of Digital Platforms: Reviews, Ratings, and Recommendations By Paul Belleflamme; Martin Peitz
  3. 국제사회의 공유경제 추진현황과 시사점 (Current status and implications of the sharing economy in the US, Europe, and China) By Na, Seung Kwon; Kim, Eunmi; Choi, Eun Hye
  4. The Internet and Jobs: A giant opportunity for Europe By Echikson, William
  5. An Economic Analysis of Blockchains By Patrick Waelbroeck
  6. An Equilibrium Model of the Market for Bitcoin Mining By Julien Prat; Benjamin Walter
  7. Digital Infrastructure: Overcoming the digital divide in China and the European Union By Ben, Shenglin; Bosc, Romain; Jiao, Jinpu; Li, Wenwei; Simonelli, Felice; Zhang, Ruidong
  8. Was Obama Elected by the Internet? Broadband Diffusion and Voters' Behavior in US Presidential Elections By Valentino Larcinese; Luke Miner
  9. Consumer product safety in the Internet of Things By OECD
  10. Governing cryptocurrencies through forward guidance? By Goldmann, Matthias; Pustovit, Grygoriy
  11. The future of work: How G20 countries can leverage digital-industrial innovations into stronger high-quality jobs growth By Annunziata, Marco; Bourgeois, Hendrik
  12. Digital Disintermediation and Efficiency in the Market for Ideas By Christian Peukert; Imke Reimers
  13. Blockchain Disruption and Smart Contracts By Lin William Cong; Zhiguo He
  14. hort-Term Impacts of Improved Access to Mobile Savings, with and without Business Training: Experimental Evidence from Tanzania By Gautam Bastian; Iacopo Bianchi; Markus Goldstein; Joao Montalvao
  15. A first look at browser-based Cryptojacking By Shayan Eskandari; Andreas Leoutsarakos; Troy Mursch; Jeremy Clark
  16. Einfluss von Online-Ratings auf die Preisbereitschaft von Konsumenten am Beispiel von Amazon By Steusloff, Tatjana; Krusenbaum, Lena
  17. Online fundraising, self-image, and the long-term impact of ask avoidance By Adena, Maja; Huck, Steffen
  18. Towards Variable Union in Europe's Capital Markets By Amariei, Cosmina; Thomadakis, Apostolos
  19. Consumer protection enforcement in a global digital marketplace By OECD
  20. E-Commerce Integration and Economic Development: Evidence from China By Victor Couture; Benjamin Faber; Yizhen Gu; Lizhi Liu
  21. E-Commerce Integration and Economic Development: Evidence from China By Couture, Victor; Faber, Benjamin; Gu, Yizhen; Liu, Lizhi
  22. The effect of big data on recommendation quality: The example of internet search By Schaefer, Maximilian; Sapi, Geza; Lorincz, Szabolcs
  23. Price Overreactions in the Cryptocurrency Market By Guglielmo Maria Caporale; Alex Plastun
  24. Financial Fragility with SAM? By Tim Landvoigt; Stijn Van Nieuwerburgh; Daniel Greenwald
  25. Classification of crypto-coins and tokens from the dynamics of their power law capitalisation distributions By Ke Wu; Spencer Wheatley; Didier Sornette

  1. By: Nicole Jonker
    Abstract: Decentralised issued crypto "currencies", like bitcoin, have the potential to drastically change the existing retail payment system and even the monetary system. Insights into the factors that influence their adoption are therefore crucial. Using a large representative sample of retailers that sell their products online, we find that acceptance of crypto payments is currently modest (2%), but there is substantial interest among retailers to adopt crypto payments in the near future. Consumer demand, net transactional benefits and perceived adoption effort influence adoption intention and actual acceptance by retailers. Regarding non-financial factors, our findings suggest that service providers who act as intermediaries between retailers, their customers, and providers of payment instruments play a crucial role as facilitators of competition and innovation in the online retail payments market by lowering such barriers. The most serious barrier for crypto acceptance seems to be a lack of consumer demand. Information from consumers indicate that those who possess cryptos, don't use it for online payments. It seems therefore unlikely that the adoption of cryptos by retailers will increase substantially, making it highly unlikely that cryptos like bitcoin will drastically change the existing retail payment system.
    Keywords: bitcoin; cryptocurrency; technology adoption; two-sided markets; retailers; network externalities; cost; facilitating conditions
    JEL: D22 E42 G20 O33
    Date: 2018–02
  2. By: Paul Belleflamme (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales, KEDGE Business School, CESifo - CESifo); Martin Peitz (CESifo - CESifo, Department of Economics and MaCCI, University of Mannheim, CEPR - Center for Economic Policy Research - CEPR, ZEW - Centre for European Economic Research - Centre for European Economic Research)
    Abstract: The rise and success of digital platforms (such as Airbnb, Amazon, Booking, Expedia, Ebay, and Uber) rely, to a large extent, on their ability to address two major issues. First, to effectively facilitate transactions, platforms need to resolve the problem of trust in the implicit or explicit promises made by the counterparties; they post reviews and ratings to pursue this objective. Second, as platforms operate in marketplaces where information is abundant, they may guide their users towards the transactions that these users may have an interest in; recommender systems are meant to play this role. In this article, we elaborate on review, rating, and recommender systems. In particular, we examine how these systems generate network effects on platforms.
    Keywords: platforms,network effects,ratings,recommender systems,digital economics
    Date: 2018–02
  3. By: Na, Seung Kwon (Korea Institute for International Economic Policy); Kim, Eunmi (Korea Institute for International Economic Policy); Choi, Eun Hye (Korea Institute for International Economic Policy)
    Abstract: The emergence of a new phenomenon widely referred to as the sharing economy has experienced rapid growth over the past few years along with the digital evolution, allowing people to share and optimize underused personal assets on a much larger scale. The fast-paced growth of the sharing economy has taken root worldwide in both the developed and developing countries. In recent years, the sharing economy has disrupted traditional markets and generated difficult legal questions and political debates in various parts of the world. The growth of the sharing economy has led to growing pains for the platforms, participants, and regulators. The problems include legal disputes, taxation, and trust mechanisms. Despite these disputes, however, the three countries have legalized or attempted to authorize the sharing economy in different tactics while trying not to disrupt innovation associated with the sharing economy. The objective of this paper is to identify better policy options in the sharing economy for Korea by examining different countries' policy implications. To achieve this purpose, the structure of this paper is divided into five chapters. The first chapter of the paper develops a conceptual framework that supports to define and explain the sharing economy. The next three chapters touch upon different conflicts and policy implications of the sharing economy across the United States, Europe, and China. Finally, the paper concludes with a discussion of policy implications of the sharing economy for Korea. IT 기술의 발전과 함께 최근 공유경제가 디지털경제 시대에 주요한 혁신동력의 하나로 주목받고 있다. 그러나 한편으로는 공유경제 확산에 따라 기존 경제주체와의 갈등, 제도적 미비로 인한 문제가 나타나면서, 주요국들은 이에 대한 대응책 마련에 고심하고 있는 상황이다. 한국 역시 최근 우버, 에어비앤비의 국내 진출에 따라 다양한 갈등요인이 표출되고 있다. 이처럼 다양한 문제가 제기되고 있음에도 각국에서는 여전히 다양한 공유경제 기반의 비즈니스 모델이 끊임없이 나타나고 있다. 이는 최근의 소비 패턴 변화 등으로 인하여 공유경제 모델에 대한 관심과 요구가 확산되었으며, 디지털 플랫폼의 발전에 따라 공유 경제 활동을 효율적으로 구현할 수 있는 환경이 조성되었기 때문으로 판단된다. 더불어 공유경제는 사회 전체의 후생 증대뿐 아니라 지역경제 활성화, 노동시장의 유연성 확보, 창업 촉진 등 다양한 경제ㆍ사회적 문제 해결을 위한 수단으로서 각국에서 그 정책적 가치를 인정받고 있다. 이에 본 연구에서는 미국, 유럽, 중국 등 주요 국가들이 공유경제의 성장성을 유지해나가는 한편 각종 부정적 영향에 대하여 정책적으로 어떻게 대응하였는지를 살펴보고, 이를 통해 정책적 시사점을 도출하고자 하였다. 다만 광범위한 공유경제 분야를 모두 다룰 수 없기 때문에, 비교적 시장이 활성화되어 있으면서도 논쟁의 중심에 있는 숙박 및 차량 공유에 초점을 맞추어 분석하였다.
    Keywords: Sharing Economy;
    Date: 2017–12–13
  4. By: Echikson, William
    Abstract: Over the past two decades, digitalisation has unleashed deep-seated fear among workers for the future of their jobs. Many of our daily activities, from entertainment to shopping, are being transformed. Uber drivers replace taxi drivers, artificial intelligence programmed legal review software replaces lawyers, and robots replace blue-collar manufacturing workers. Some studies predict that digitalisation and robotisation will cause job losses up to 50% of all jobs over the next few decades. Yet new research argues that such assertions are mere fear-mongering and that in reality the internet is creating more jobs than it destroys – and that these new jobs are better paid and less physically strenuous than their predecessors. Although most studies look at the United States and still need to be ‘Europeanised’, this optimistic view of future work suggests that this technology-fuelled job creation is not limited to tech hubs such as London and Berlin, but is moving quickly into provincial cities and is even reaching into the hinterlands long dominated by traditional industries such as coal, steel and farming. The internet reduces distances. By allowing access to the world with a few clicks, it lowers barriers to entry and gives provincial and rural dwellers new opportunities to communicate, engage and reach a global market. Thanks to the new sharing economy, it permits immigrant and marginalised populations to re-join the workplace. And finally, digitalisation powers new personalised manufacturing, opening the horizon to repatriating lost factory jobs from Asia to Europe. The full benefits of the digital transformation only will be achieved if correct policies are implemented. Our key recommendation is to enable, not to try and stop, the digital labour market revolution. Policymakers should resist giving into incumbent interests who want to protect their privileges. If anything, they should speed up the rate of creative destruction in order to raise living standards for all.
    Date: 2017–11
  5. By: Patrick Waelbroeck
    Abstract: The blockchain is a technology that goes beyond timestamping, bitcoin and secure financial transactions. The development of an ecosystem around smart connected objects will probably not happen without the blockchain (in one form or another). The blockchain opens the door to the liquification of the physical world, to the economy of real-time micro-transactions and to smart data sharing. However, it is necessary to distinguish between the different types of blockchains, especially between public and private blockchains, because their economic properties are contrasted. Moreover, governance issues in public blockchains seem to indicate that the technology alone cannot guarantee trust.
    Keywords: blockchain, bitcoin, ether, security, payment, governance, trust, oracles, forks, hash, smart contracts, tokens, smart locks, technology diffusion, crypto-currency, financial privacy
    JEL: E51 G34 H41 L14 L52
    Date: 2018
  6. By: Julien Prat; Benjamin Walter
    Abstract: We propose a model which uses the Bitcoin/US dollar exchange rate to predict the computing power of the Bitcoin network. We show that free entry places an upper-bound on mining revenues and we devise a structural framework to measure its value. Calibrating the model’s parameters allows us to accurately forecast the evolution of the network computing power over time. We establish the accuracy of the model through out-of-sample tests and investigation of the entry rule.
    Keywords: Bitcoin, blockchain, miners, industry dynamics
    JEL: D41 L10
    Date: 2018
  7. By: Ben, Shenglin; Bosc, Romain; Jiao, Jinpu; Li, Wenwei; Simonelli, Felice; Zhang, Ruidong
    Abstract: This study is the result of collaboration among a group of researchers from CEPS and Zhejiang University (ZJU), who decided to team up and analyse the experience of China and the EU in bridging the digital divide. While acknowledging that both China and Europe have undertaken major efforts to reduce socio-economic and geographical disparities by providing network access to ever more citizens, the authors found that investing in physical access alone is not sufficient to enhance inclusion in the information society. They argue that public authorities should also adopt corollary policies to spur social and economic cohesion through innovations that enable disadvantaged regions to catch up with more developed urban areas. In this context, the report calls upon governments to promote digital innovation and entrepreneurship, foster coordinated efforts and adapt their educational systems to the changing labour market.
    Date: 2017–11
  8. 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: 2018
  9. By: OECD
    Abstract: In addition to offering greater product choice and convenience to consumers, the IoT is expected to revolutionise the way product design, manufacturing, and product delivery processes are monitored, analysed and improved, including remotely. This report describes current and emerging IoT developments that may have implications for consumer product safety policy design and enforcement. It describes the opportunities afforded by the IoT to enhance the quality of products, help prevent consumer product safety hazards or damage, and to create better ways to manage safety in the supply chain and the marketplace. The report also draws attention to the potential for the IoT to give rise to new safety risks, and questions about whether existing liability and product safety regulatory regimes are adequate.
    Date: 2018–03–29
  10. By: Goldmann, Matthias; Pustovit, Grygoriy
    Abstract: While the debate about the needs and merits of cryptocurrency regulation is ongoing, the unprecedented price hikes of cryptocurrencies towards the end of 2017 triggered a somewhat unexpected sort of regulation in the form of public statements by governments and financial supervisors. It kicked in rather quickly and turned out to be much more effective than imagined. These interventions can be identified as one of the main factors that drove asset prices down, thereby preventing destabilizing bubbles. The experience of the supervisory response to the cryptocurrency bubble of the past months keeps important insights for any prospective regulation of cryptocurrencies. First, public statements are a highly effective regulatory tool in the short term as they manage market expectations, a fact which is well-known as forward guidance in monetary policy. So far, the legal framework in the EU takes insufficient account of the regulatory role of public statements. Second, regulation needs to keep up with the incredible speed of fintech innovations. Some regulators addressed the challenge by adopting a "sandbox" approach. However, the "sandbox" approach clearly calls for international cooperation. To achieve a balance between safety and innovation, international cooperation should emulate the experimental character of sandboxes. One could conceive of a "sandbox for regulators", an arrangement which would facilitate the exchange of information on regulatory initiatives among authorities but also the coordination of communication and forward guidance.
    Keywords: cryptocurrencies,blockchain,distributed ledger technology,regulation,forward guidance
    Date: 2018
  11. By: Annunziata, Marco; Bourgeois, Hendrik
    Abstract: A new wave of innovation is beginning to disrupt industry on a global scale. It constitutes a tremendous opportunity for faster productivity growth, but also a potential disruption to a number of economic sectors and to job markets. Academic research and the public debate have focused mostly on the threat that innovation poses to jobs and wages. This paper instead suggests that (i) these same technological disruptions make human capital more important than ever for companies' strategies; (ii) greater attention needs to be devoted to new forms of complementarity between new technologies and human capital. While some jobs will be displaced, the greatest impact of innovation will come in the way that many jobs will be transformed; the evidence to date supports the authors' view that innovation will once again result in more and better jobs - but much work needs to be done to optimize the transition. In particular, more effort should be devoted to (i) understanding what new skills will be needed, and how existing jobs will change; (ii) upgrading education and professional training schemes; (iii) reforming labor market institutions to support a future where a larger share of workers will change jobs and employers more frequently, and more people will work independently in a crowdsourcing or "gig economy" framework; (iv) reforming social benefits systems and bolstering social safety nets to smooth the economic transition and cushion the impact on the worst-affected workers. As innovation disrupts a growing number of industries, human capital strategies will need the collaboration of companies, educational institutions, governments and multilateral policy agencies. This paper presents an analysis of the challenges, addresses the key areas of action, and puts forward some specific proposals, including policy actions, industry initiatives, and further research projects. The authors argue that the G20 could and should champion a comprehensive approach to leverage digital-industrial innovations for faster job creation and growth, with measures to re-align demand and supply of skills, labor market reforms, redesigned social safety nets, measures to promote digital innovation and facilitate the adoption of skills-augmenting technologies. Private sector companies should strengthen training programs. International cooperation, standards harmonization and interoperability will be essential to maximize the benefits and minimize the disruptions - the G20 can therefore play a key role.
    Keywords: innovation,productivity,technological unemployment,training,education,manufacturing,R&D,investment
    JEL: J20 J23 J24 J62 J68 O32 O33 M5 I28 E24 D24
    Date: 2018
  12. By: Christian Peukert; Imke Reimers
    Abstract: Digital technology has allowed inventors to circumvent traditional intermediaries and directly reach consumers, which may affect licensing outcomes and efficiency in the market for ideas. We study these impacts theoretically and empirically in the book publishing industry, where the number of new books available to consumers has almost doubled after the advent of digital self- publishing platforms. Using data on over 90,000 license deals between authors and publishers from 2002 to 2015, we identify disintermediation-related changes in this market from quasi-experimental variation across product types over time. Consistent with digital self-publishing improving an author’s bargaining position, we find that authors get substantially more favorable license deals. We further show that ex-ante license fees reflect ex-post demand more accurately. This is consistent with additional entry generating more information about a product type’s realized appeal. In markets in which product appeal is difficult to predict, such improvements in the information environment can have large impacts on efficiency and welfare.
    Keywords: disintermediation, innovation, book publishing, natural experiment
    JEL: D22 D83
    Date: 2018
  13. By: Lin William Cong; Zhiguo He
    Abstract: Blockchain technology features decentralized consensus as well as tamper-proof and algorithmic executions, and consequently enlarges the contracting space through smart contracts. Meanwhile, the process of generating decentralized consensus, which involves information distribution, necessarily alters the informational environment. We analyze how decentralization improves consensus effectiveness, and how the quintessential features of blockchain reshape industrial organization and the landscape of competition. Smart contracts can mitigate information asymmetry and deliver higher social welfare and consumer surplus through enhanced entry and competition, yet blockchains may also encourage collusion due to the irreducible distribution of information, especially in consensus generation. In general, blockchains can sustain market equilibria with a larger range of economic outcomes. We further discuss anti-trust policy implications targeted to blockchain applications, such as separating consensus record-keepers from users.
    JEL: D4 D8 G2 L13 L4 O3
    Date: 2018–03
  14. By: Gautam Bastian (World Bank); Iacopo Bianchi (World Bank); Markus Goldstein (World Bank); Joao Montalvao (World Bank)
    Abstract: This paper presents short-term results from an experiment randomizing the promotion and registration of a mobile savings account among women microentrepreneurs in Tanzania, with and without business training. Six months post-intervention, the results show that women save substantially more through the mobile account, and that the business training bolstered this effect. Women also obtain more microloans through the mobile account, an additional service provided by the product. The business training further led to an increase in the business practices of the women. We find no significant evidence that these impacts translate into greater investment, sales, and profits, but we see some evidence of increased business expansion through the creation of profitable secondary businesses, as well as improvements in women’s empowerment and subjective well-being.
    Date: 2018–03–16
  15. By: Shayan Eskandari; Andreas Leoutsarakos; Troy Mursch; Jeremy Clark
    Abstract: In this paper, we examine the recent trend towards in-browser mining of cryptocurrencies; in particular, the mining of Monero through Coinhive and similar code- bases. In this model, a user visiting a website will download a JavaScript code that executes client-side in her browser, mines a cryptocurrency, typically without her consent or knowledge, and pays out the seigniorage to the website. Websites may consciously employ this as an alternative or to supplement advertisement revenue, may offer premium content in exchange for mining, or may be unwittingly serving the code as a result of a breach (in which case the seigniorage is collected by the attacker). The cryptocurrency Monero is preferred seemingly for its unfriendliness to large-scale ASIC mining that would drive browser-based efforts out of the market, as well as for its purported privacy features. In this paper, we survey this landscape, conduct some measurements to establish its prevalence and profitability, outline an ethical framework for considering whether it should be classified as an attack or business opportunity, and make suggestions for the detection, mitigation and/or prevention of browser-based mining for non- consenting users.
    Date: 2018–03
  16. By: Steusloff, Tatjana (Department of Economics of the Duesseldorf University of Applied Sciences); Krusenbaum, Lena
    Abstract: Der steigende Umsatz im Online-Handel lässt eine zunehmende Bereitschaft von Konsumenten erkennen, Produkte online zu erwerben. Wird eine Kaufentscheidung online getroffen, dann liegt eine Informationsasymmetrie zugunsten des Verkäufers vor. Daher sind für die Konsumenten Informationen zu den gewünschten Kaufobjekten von hoher Bedeutung, um die Produktqualität beurteilen zu können. Neben den Produktinformationen des Händlers beeinflussen die Kaufentscheidung der Konsumenten zunehmend von Käufern verfasste Online-Rezensionen (OR). Diese werden von potentiellen Käufern oft als sehr glaubwürdig wahrgenommen, da sie von einem tatsächlichen Konsumenten verfasst wurden. In dieser Studie wurde die Wirkung dieser Rezensionen auf die Zahlungsbereitschaft von Käufern bei Amazon untersucht. Die Ergebnisse legen den Schluss nahe, dass vom Konsumenten als positiv wahrgenommene Online-Rezensionen einen signifikant positiven Einfluss auf die Zahlungsbereitschaft haben, negativ wahrgenommene ORs diese jedoch tendenziell senken. Beeinflusst die OR die Qualitätswahrnehmung positiv, so erhöht sich tendenziell die maximale Preisbereitschaft von potenziellen Käufern. Die Erkenntnisse dieser Studie sind für alle Unternehmen relevant, die ihre Produkte bei Amazon verkaufen. Sie können mit diesem Wissen u.a. ihr Rezensionssystem optimieren und ihre Preispolitik so ausrichten, dass Umsätze optimiert werden können.
    Abstract: Increasing online sales indicate a rising willingness of consumers to buy their products online. For a purchase decision made online there often exists an information asymmetry in favor of the seller. Therefore, in-formation about the desired purchase object are of high importance for the potential consumers in order to assess product quality. In particular, consumer-written online reviews (OR) increasingly influence the online purchase decision, since they are written by actual consumers and thus perceived as very credible. In this study, the effect of these reviews on Amazon consumers’ willingness to pay (WTP) was analyzed. Results indicate an increased willingness to pay if consumers perceive ORs positively, whereas negative reviews tend to lower the WTP. If OR influences the quality perception positively, the maximum willingness to pay of potential buyers tends to increase. The findings of this study are relevant to all companies that sell their products on Amazon. With this knowledge, they can tailor their pricing policy to optimize sales.
    Keywords: Online-Rezensionen, Amazon, Preisbereitschaft, Kaufentscheidung, Online Ratings, Willingness-to-pay, Purchase Decision
    JEL: L1 G1
  17. By: Adena, Maja; Huck, Steffen
    Abstract: We provide the first field evidence for the role of pure self-image, independent of social image, in charitable giving. In an online fundraising campaign for a social youth project run on an opera ticket booking platform we document how individ-uals engage in self-deception to preserve their self-image. In addition, we provide evidence on stark adverse long-run effects of the fundraising campaign for ticket sales. “Avoiding the ask,” opera customers who faced more insistent online fund-raising buy fewer tickets in the following season. Our results suggest that fund-raising management should not decide in isolation about their campaigns, even if very successful. Rather broader operational concerns have to be considered.
    Keywords: online fundraising,quasi-experiment,self-image
    JEL: D64 D03 D12 C93 L31
    Date: 2018
  18. By: Amariei, Cosmina; Thomadakis, Apostolos
    Abstract: In the past seven years, the European Capital Markets Institute (ECMI) has brought together academics, policymakers and industry representatives to take stock of the progress made so far in building a genuine European capital market. At the Annual Conference organised in November 2017, the participants identified the challenges and opportunities that lie ahead but also assessed whether more ambition is required. In particular, they shared their views on long-term investment, supervisory architecture, derivatives markets and fintech. The key message was that the capital markets union (CMU) must go beyond the actions set for end-2019. CMU is a long-term project that requires the support of multiple stakeholders from both the public and private sectors. Capital markets, in particular equity and long-term institutional investors, are best suited to finance real assets in the economy. There are undoubtedly areas that should be brought within the remit of ESMA, but achieving supervisory convergence will be the main objective where this is neither possible nor necessary. Brexit-driven relocation might lead to a more balanced landscape of the euro-denominated clearing activities in Europe. With respect to the potential of distributed ledger technology, it is essential to establish a critical mass of market players and interoperability with the existing infrastructures.
    Date: 2018–03
  19. By: OECD
    Abstract: This report examines information on consumer protection enforcement authorities of OECD member and non-member countries, especially on the ability of these authorities to co-operate across borders. It is based on questionnaire responses from 31 countries, supplemented by additional research. It has been prepared to support a review of the 2003 OECD Recommendation of the Council concerning Guidelines for Protecting Consumers from Fraudulent and Deceptive Commercial Practices across Borders. It will also inform work to implement the 2016 OECD Recommendation of the Council on Consumer Protection in E-Commerce, which contains updated provisions on enforcement co-operation.
    Date: 2018–03–28
  20. By: Victor Couture; Benjamin Faber; Yizhen Gu; Lizhi Liu
    Abstract: The number of people buying and selling products online in China has grown from practically zero in 2000 to more than 400 million by 2015. Most of this growth has occurred in cities. In this context, the Chinese government recently announced the expansion of e-commerce to the countryside as a policy priority with the objective to close the rural-urban economic divide. As part of this agenda, the government entered a partnership with a large Chinese e-commerce firm. The program invests in the necessary logistics to ship products to and sell products from tens of thousands of villages that were largely unconnected to e-commerce trading. The firm also installs an e-commerce terminal at a central village location, where a terminal manager assists households in buying and selling products through the firm's e-commerce platform. This paper combines a new collection of survey and administrative microdata with a randomized control trial (RCT) that we implement across villages in collaboration with the e-commerce firm. We use this empirical setting to provide evidence on the potential of e-commerce integration to foster economic development in the countryside, the underlying channels and the distribution of the gains from e-commerce across households and villages.
    JEL: O12 R13
    Date: 2018–03
  21. By: Couture, Victor; Faber, Benjamin; Gu, Yizhen; Liu, Lizhi
    Abstract: The number of people buying and selling products online in China has grown from practically zero in 2000 to more than 400 million by 2015. Most of this growth has occurred in cities. In this context, the Chinese government recently announced the expansion of e-commerce to the countryside as a policy priority with the objective to close the rural-urban economic divide. As part of this agenda, the government entered a partnership with a large Chinese e-commerce firm. The program invests in the necessary logistics to ship products to and sell products from tens of thousands of villages that were largely unconnected to e-commerce trading. The firm also installs an e-commerce terminal at a central village location, where a terminal manager assists households in buying and selling products through the firm's e-commerce platform. This paper combines a new collection of survey and administrative microdata with a randomized control trial (RCT) that we implement across villages in collaboration with the e-commerce firm. We use this empirical setting to provide evidence on the potential of e-commerce integration to foster economic development in the countryside, the underlying channels and the distribution of the gains from e-commerce across households and villages.
    Keywords: E-commerce; economic development; rural-urban divide; trade integration
    JEL: O12 R13
    Date: 2018–03
  22. By: Schaefer, Maximilian; Sapi, Geza; Lorincz, Szabolcs
    Abstract: Are there economies of scale to data in internet search? This paper is first to use real search engine query logs to empirically investigate how data drives the quality of internet search results. We find evidence that the quality of search results improve with more data on previous searches. Moreover, our results indicate that the type of data matters as well: personalized information is particularly valuable as it massively increases the speed of learning. We also provide some evidence that factors not directly related to data such as the general quality of the applied algorithms play an important role. The suggested methods to disentangle the effect of data from other factors driving the quality of search results can be applied to assess the returns to data in various recommendation systems in e-commerce, including product and information search. We also discuss the managerial, privacy, and competition policy implications of our findings.
    Keywords: Big Data,Recommendation quality,Internet search,E-Commerce,Economies of Scale,Search engines
    Date: 2018
  23. By: Guglielmo Maria Caporale; Alex Plastun
    Abstract: This paper examines price overreactions in the case of the following cryptocurrencies: BitCoin, LiteCoin, Ripple and Dash. A number of parametric (t-test, ANOVA, regression analysis with dummy variables) and non-parametric (Mann–Whitney U test) tests confirm the presence of price patterns after overreactions: the next-day price changes in both directions are bigger than after “normal” days. A trading robot approach is then used to establish whether these statistical anomalies can be exploited to generate profits. The results suggest that a strategy based on counter-movements after overreactions is not profitable, whilst one based on inertia appears to be profitable but produces outcomes not statistically different from the random ones. Therefore the overreactions detected in the cryptocurrency market do not give rise to exploitable profit opportunities (possibly because of transaction costs) and cannot be seen as evidence against the Efficient Market Hypothesis (EMH).
    Keywords: cryptocurrency market, Bitcoin, overreaction, momentum, abnormal returns, contrarian strategy, trading strategy, trading robot
    JEL: G12 G17 C63
    Date: 2018
  24. By: Tim Landvoigt (University of Texas at Austin); Stijn Van Nieuwerburgh (New York University); Daniel Greenwald (MIT)
    Abstract: Shared Appreciation Mortgages (SAMs) feature mortgage payments that adjust with house prices. Such mortgage contracts can stave off home owner default by providing payment relief in the wake of a large house price shock. SAMs have been hailed as an innovative solution that could prevent the next foreclosure crisis, act as a work-out tool during a crisis, and alleviate fiscal pressure during a downturn. They have inspired Fintech companies to offer home equity contracts. However, the home owner’s gains are the mortgage lender’s losses. We consider a model with financial intermediaries who channel savings from saver households to borrower households. The financial sector has limited risk bearing capacity. SAMs pass through more aggregate house price risk and lead to financial fragility when the shock happens in periods of low intermediary capital. We compare house prices,mortgage rates, the size of the mortgage sector, default and refinancing rates, as well as borrower and saver consumption between an economy with standard mortgage contracts and an economy with SAMs.
    Date: 2017
  25. By: Ke Wu; Spencer Wheatley; Didier Sornette
    Abstract: We empirically verify that the market capitalisations of coins and tokens in the cryptocurrency universe follow power law distributions with significantly different values, with the tail exponent falling between 0.5 and 0.7 for coins, and between 1.0 and 1.3 for tokens. We provide a rational for this, based on a simple birth-proportional growth-death model previously introduced to describe firms, cities, webpages, etc. We validate the model and its main predictions, in terms of proportional growth and linear versus square-root growth law of the mean and standard deviation of market capitalisation as a function of time interval. Estimating the main parameters of the model, the theoretical predictions for the power law exponents of coins and tokens distribution are in remarkable agreement with the empirical estimations, given the simplicity of the model in the face of the complexity and non-stationarity of the crypto-currency world. Our results clearly characterizes coins as being "entrenched incumbents" and tokens as an "explosive immature ecosystem", largely due to massive and exuberant Initial Coin Offering activity in the token space. The theory predicts that the exponent for tokens should converge to 1 in the future, reflecting a more reasonable rate of new entrants associated with genuine technological innovations.
    Date: 2018–03

This nep-pay issue is ©2018 by Bernardo Bátiz-Lazo. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.