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on Payment Systems and Financial Technology |
| By: | Chiu, Jonathan; Koeppl, Thorsten |
| Abstract: | How well can a cryptocurrency serve as a means of payment? We study the optimal design of cryptocurrencies and assess quantitatively how well such currencies can support bilateral trade. The challenge for cryptocurrencies is to overcome double-spending by relying on competition to update the blockchain (costly mining) and by delaying settlement. We estimate that the current Bitcoin scheme generates a large welfare loss of 1.4% of consumption. This welfare loss can be lowered substantially to 0.08% by adopting an optimal design that reduces mining and relies exclusively on money growth rather than transaction fees to nance mining rewards. We also point out that cryptocurrencies can potentially challenge retail payment systems provided scaling limitations can be addressed. |
| Keywords: | Demand and Price Analysis, Financial Economics |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:ags:quedwp:274715&r=pay |
| By: | Lars Hornuf; Milan F. Klus; Todor S. Lohwasser; Armin Schwienbacher |
| Abstract: | The increasing pervasiveness of technology-driven firms that offer banking services has led to a growing pressure on traditional banks to modernize their core business activities. Banks attempt to confront the challenges of digitalization by cooperating with financial technology firms (fintechs) in various forms. In this paper, we investigate the factors that drive banks to form alliances with fintechs. Furthermore, we analyze whether such bank-fintech alliances affect the market valuation of banks. We provide descriptive evidence on the different forms of alliances occurring in practice. Using hand-collected data covering the largest banks from Canada, France, Germany, and the United Kingdom, we show that banks are significantly more likely to form alliances with fintechs when they pursue a well-defined digital strategy and/or employ a Chief Digital Officer. We evidence that markets react more strongly if digital banks rather than traditional banks announce a bank-fintech alliance. Finally, we find that alliances are most often characterized by a product-related collaboration between the bank and the fintech and that banks most often cooperate with fintechs providing payment services. |
| Keywords: | fintech, strategic alliance, entrepreneurial finance, financial institutions, banks |
| JEL: | G21 G23 G34 M13 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7170&r=pay |
| By: | Dirk Niepelt |
| Abstract: | I offer a macroeconomic perspective on the “Reserves for All” (RFA) proposal to let the general public use electronic central bank money. After distinguishing RFA from cryptocurrencies and relating the proposal to discussions about narrow banking and the abolition of cash I propose an equivalence result according to which a marginal substitution of outside for inside money does not affect macroeconomic outcomes. I identify key conditions on bank and government (central bank) incentives for equivalence and argue that these conditions likely are violated, implying that RFA would change macroeconomic outcomes. I also relate my analysis to common arguments in the discussion about RFA and point to inconsistencies and open questions. |
| Keywords: | central bank digital currency, Fedcoin, CADcoin, e-krona, e-Peso, J Coin, reserves for all, deposits, narrow banking, cash, equivalence, central bank, lender of last resort, politico-economic equivalence |
| JEL: | E42 E51 E58 E61 E63 H63 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7176&r=pay |
| By: | Parlasca, Martin C.; Mußhoff, Oliver; Qaim, Matin |
| Abstract: | The digital revolution and the ongoing dissemination of mobile phones carry several prospects for smallholder farmers in Sub-Saharan Africa. Food insecurity remains a major issue among African smallholders. Mobile phones could potentially facilitate access to food markets and thus improve food security and nutrition, but research on such types of effects remains scarce. In this study we analyze whether mobile phones improve dietary quality of pastoralists in Northern Kenya. We use six rounds of household panel data covering the period between 2009 and 2015. During this period, mobile phone ownership in the sample increased from less than 30% to more than 70%. Regression models with household fixed effects allow robust estimation while reducing potential issues of unobserved heterogeneity. The estimates show that mobile phone adoption has increased dietary diversity. The effect size increases with the frequency of mobile phone use. We also examine the underlying mechanisms. Mobile phones improve dietary diversity mainly through better access to purchased foods. These results encourage the promotion of mobile phone technologies as a valuable tool for nutritional improvements, especially in rural settings with poor access to food markets. |
| Keywords: | Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Institutional and Behavioral Economics, Research and Development/Tech Change/Emerging Technologies |
| Date: | 2018–06–29 |
| URL: | http://d.repec.org/n?u=RePEc:ags:gagfdp:274651&r=pay |
| By: | Yao Wang (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic); Zdenek Drabek (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic); Zhengwei Wang (Tsinghua University, PBC School of Finance) |
| Abstract: | Online peer to peer lending (P2P)– allows people who want to borrow money to submit their applications on the platform and individual investors can make bids on the loan listings. The quality of information in credit appraisal becomes paramount in this market. The existing research to assess the role of what is known as soft information in P2P markets has so far been very limited and, inconclusive due to differences in approaches and methodological limitations. The aim of the paper is to discuss the role of soft information channels in predicting defaults in the P2P lending market and to assess the importance of soft information in the Fintech companies’ credit analysis. Using a unique data of the Chinese P2P lending platform RRDai.com and new approach based on sets of hard and soft information, we compare the predicting performance of soft information, hard information and the combined role of both hard and soft information. We show that soft information can provide a valuable input in credit appraisal. The predicting power of soft information in our test was high, and together with hard information it can even help improve the loan performance. In exceptional situations characterized by the absence of hard financial data, soft information could be used, with caution, as an alternative. |
| Keywords: | Soft Information, P2P Lending, Fintech, Microfinance, Credit Analysis, Empirical Study |
| JEL: | D82 E51 G02 G14 G21 G23 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2018_20&r=pay |
| By: | Cátia Batista; Marcel Fafchamps; Pedro C. Vicente |
| Abstract: | SMS information campaigns are increasingly used for policy. To investigate their effectiveness, we conduct a lab-in-the-field experiment to study information sharing through mobile phone messages. Subjects are rural households in Mozambique who have access to mobile money. In the base treatment, subjects receive an SMS containing information on how to redeem a voucher. They can share this information with other exogeneously assigned subjects. We find that few participants redeem the voucher. They nonetheless share it with others and many share information they do not use themselves. Information is shared more when communication is anonymous and we find no evidence of homophily in information sharing. We introduce treatments to vary the cost of sending a message, shame those who do not send the voucher to others, or allow subjects to appropriate the value of information. All decrease information sharing. To encourage information sharing, the best is to keep it simple. |
| JEL: | D64 D83 O33 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24908&r=pay |
| By: | Simplice Asongu (Yaoundé/Cameroun); Sara le Roux (Oxford, UK); Jacinta Nwachukwu (University of Central Lancashire, UK); Chris Pyke (University of Central Lancashire, UK) |
| Abstract: | Purpose- This study presents theoretical and empirical arguments for the role of mobile telephony in promoting good governance in 47 sub-Saharan African countries for the period 2000-2012. Design/methodology/approach- The empirical inquiry uses an endogeneity-robust GMM approach with forward orthogonal deviations to analyse the linkage between mobile phone usage and the variation in three broad governance categories — political, economic and institutional. Findings- Three key findings are established: First, in terms of individual governance indicators, mobile phones consistently stimulated good governance by the same magnitude, with the exception of the effect on the regulation component of economic governance. Second, when indicators are combined, the effect of mobile phones on general governance is three times higher than that on the institutional governance category. Third, countries with lower levels of governance indicators are catching-up with their counterparts with more advanced dynamics. Originality/value- The study makes both theoretical and empirical contributions by highlighting the importance of various combinations of governance indicators and their responsiveness to mobile phone usage. |
| Keywords: | comparative study, ICT, IT diffusion and adoption |
| JEL: | G20 O38 O40 O55 P37 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:18/029&r=pay |
| By: | Burgelman, Robert A. (Stanford University); Thomas, John K. (?) |
| Abstract: | This study of the transformation of the mobile device industry examines how cross-boundary disruption (XBD) superseded the incumbents' sustaining innovation, which helps explain the rapid rise of Apple and Google Android and the equally rapid fall of Nokia and other incumbents between 2007 and 2013. Four concatenated strategic factors limited the incumbents' capacity to adapt: (1) incumbents' market myopia about latent unserved needs of the high-end customer segment, (2) incumbents' dynamic capabilities gaps for meeting these needs, (3) demand shift timing of high-end customers toward the disruptors' radically innovative products, and (4) the rapid growth of novel ecosystems around the disruptors' technology platforms. Graphical interpretation further elucidates these concatenated strategic factors and suggests computational implications. The paper's qualitative, graphical and computational insights help formulate a conceptual framework of XBD-from-above, which contributes to theory development about inter-industry disruption and transformation. |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3705&r=pay |
| By: | Mikhail Yakovlevich Veselovsky (University of Technology); Tatiana Vitalievna Pogodina (Financial University under the Government of the Russian Federation); Raisa Vasilyevna Ilyukhina (Moscow Technological University); Tatyana Anatolyevna Sigunova (Moscow Technological University); Nina Fedorovna Kuzovleva (Moscow Technological University) |
| Abstract: | The paper analyzes some financial, tax, information, communication, infrastructural, technological and organizational mechanisms of innovative activity promotion in conditions of transition to a digital economy. End-to-end technologies including "Big Data", "New Production Technologies", "Quantum Technologies", "Technologies of Virtual and Augmented Realities", the possibilities of their application in various sectors of the national economy were singled out and analyzed. The role of end-to-end technologies in the development of the Russian economy and promotion of innovative activities of companies was studied. A comparative analysis of the main indicators of informatization of the society of Russia and some leading foreign countries for the period of 2005-2015 was carried out. The conclusions were made about an insufficient use of the Internet in Russia, primarily in rural areas, which hindered the social progress of Russian society. The leading role of digital (information) technologies in solving social problems, including education, social services and healthcare, was defined. The necessity of development of electronic services in the sphere of education and health was proved. Ways of cluster development based on the example of the Kaluga Region in the development of digital technologies were studied. The influence of development institutions on stimulating innovation activity in Russia was analyzed. |
| Date: | 2018–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01829712&r=pay |
| By: | Sekabira, Haruna; Qaim, Matin |
| Abstract: | During the last 10-15 years, mobile phone technologies have been widely adopted in most developing countries, including adoption by rural households that never had access to landline phones before. Existing research shows that use of mobile phones has improved market access for smallholder farmers and thus household income. Beyond income, mobile phones can possibly also affect other dimensions of social welfare, such as gender equality and nutrition. Such broader social welfare effects have hardly been analyzed up till now. Here, we address this research gap, using panel data from smallholder farm households in Uganda. Regression results show that mobile phones have significantly contributed to household income gains and women empowerment. Mobile phone use has also improved household food security and dietary quality. Simultaneous equation models are estimated to show that the positive nutrition effects are primarily channeled through the influence of mobile phones on household income and gender equality. Gender disaggregation reveals that female mobile phone use has stronger positive welfare effects than if males alone use mobile phones. We conclude that equal access to mobile phones cannot only foster economic development, but can also contribute to gender equality, food security, and broader social development. |
| Keywords: | Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Food Security and Poverty |
| Date: | 2017–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:gagfdp:256215&r=pay |
| By: | Axel Gautier; Robert Somogyi |
| Abstract: | This paper analyzes two business practices on the mobile internet market, paid prioritization and zero-rating. Both violate the principle of net neutrality by allowing the internet service provider to discriminate different content types. In recent years these practices have attracted considerable media attention and regulatory interest. The EU, and until recently the US have banned paid prioritization but tolerated zero-rating under conditions. With prioritization, the ISP delivers content at different speeds and it is equivalent to a discrimination in terms of quality. With zero-rating, the ISP charges different prices for content and it is equivalent to a discrimination in terms of prices. We first show that neither of these practices lead to the exclusion of a content provider, a serious concern of net neutrality advocates. The ISP chooses prioritization when traffic is highly valuable for content providers and congestion is severe, and zero-rating in all other cases. Furthermore, investment in network capacity is suboptimal in the case of prioritization and socially optimal under zero-rating. |
| Keywords: | net neutrality, paid prioritization, zero-rating, sponsored data, data cap, congestion |
| JEL: | D21 L12 L51 L96 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7185&r=pay |
| By: | Chiu, Jonathan; Koeppl, Thorsten |
| Abstract: | Can securities be settled on a blockchain and, if so, what are the gains relative to existing settlement systems? We consider a blockchain that ensures delivery-vs-payment by linking transfers of assets with payments and operates via a Proof-of-Work protocol. The main problem is to overcome settlement fails where participants fork the chain to get rid of trading losses. To deter forking, the blockchain needs to restrict block size and block time in order to generate sucient transaction fees which nance costly mining. We show that large enough trading volume, suciently strong preferences for fast settlement and limited trade size and risk are necessary conditions for blockchain-based settlement to be feasible. Despite mining being a deadweight cost, our estimates based on the market for US corporate debt show that gains from moving to faster and more exible settlement are in the range of 1-4 bps relative to existing legacy settlement systems. |
| Keywords: | Financial Economics |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:quedwp:274723&r=pay |
| By: | Jeremiah O. Ejemeyovwi (Covenant University, Nigeria); Evans S. Osabuohien (Covenant University, Nigeria) |
| Abstract: | This paper empirically investigates the role of mobile technology adoption on inclusive growth in 15 West African countries with a view to ascertaining if the positive role of mobile technology adoption on human development as established in other regions holds in West Africa. It used data from World Development Indicators for the period 2004 to 2014, which was estimated with system generalised method of moments (SGMM). The SGMM results show that mobile cell subscription has a statistically insignificant effect on inclusive growth in West Africa which refutes the positive and significant role of mobile technology adoption on inclusive growth. The possible reasons for the results and recommendations are documented in the study. |
| Keywords: | ICT; Inclusive growth; Mobile technology; SGMM |
| JEL: | O30 O15 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:18/028&r=pay |
| By: | De Stefano, Valerio. |
| Abstract: | This paper aims at filling some gaps in the mainstream debate on automation, the introduction of new technologies at the workplace and the future of work. This debate has concentrated, so far, on how many jobs will be lost as a consequence of technological innovation. This paper examines instead issues related to the quality of jobs in future labour markets. It addresses the detrimental effects on workers of awarding legal capacity and rights and obligation to robots. It examines the implications of practices such as People Analytics and the use of big data and artificial intelligence to manage the workforce. It stresses on an oft-neglected feature of the contract of employment, namely the fact that it vests the employer with authority and managerial prerogatives over workers. It points out that a vital function of labour law is to limit these authority and prerogatives to protect the human dignity of workers. In light of this, it argues that even if a Universal Basic Income were introduced, the existence of managerial prerogatives would still warrant the existence of labour regulation since this regulation is about much more than protecting workers’ income. It then highlights the benefits of human- rights based approaches to labour regulation to protect workers’ privacy against invasive electronic monitoring. It concludes by highlighting the crucial role of collective regulation and social partners in governing automation and the impact of technology at the workplace. It stresses that collective dismissal regulation and the involvement of workers’ representatives in managing and preventing job losses is crucial and that collective actors should actively participate in the governance of technology-enhanced management systems, to ensure a vital “human- in-command” approach. |
| Keywords: | 1, 2, 3 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:994998792302676&r=pay |
| By: | Kairong Xiao |
| Abstract: | This paper documents a new transmission channel of monetary policy: the shadow money channel. Analyzing U.S. money supply data from 1987 to 2012, I find that shadow money, namely liquid deposits created by shadow banks, expands significantly when the Federal Reserve tightens monetary policy. Using a structural model of bank competition, I show that this new channel is a result of imperfect competition between commercial and shadow banks in the deposit market with heterogeneous depositors. Due to a lack of a bank charter, shadow banks offer lower transaction convenience and hence must compete on yields. During periods of monetary tightening, shadow banks pass through more rate hikes to depositors, thereby poaching yield-sensitive deposits from commercial banks. Fitting my model to institution-level data from commercial banks and money market funds, I show that shadow money creation offsets 35 cents of each dollar in commercial bank deposit reductions, significantly dampening the impact of monetary tightening. My results suggest that monetary tightening may unintentionally drive more deposits into the uninsured shadow banking sector, thereby amplifying the risk of bank runs. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:616&r=pay |
| By: | Erik Brynjolfsson; Xiang Hui; Meng Liu |
| Abstract: | Artificial intelligence (AI) is surpassing human performance in a growing number of domains. However, there is limited evidence of its economic effects. Using data from a digital platform, we study a key application of AI: machine translation. We find that the introduction of a machine translation system has significantly increased international trade on this platform, increasing exports by 17.5%. Furthermore, heterogeneous treatment effects are all consistent with a substantial reduction in translation-related search costs. Our results provide causal evidence that language barriers significantly hinder trade and that AI has already begun to improve economic efficiency in at least one domain. |
| JEL: | D8 F1 F14 O3 O33 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24917&r=pay |
| By: | Guillaume R. Fréchette; Alessandro Lizzeri; Tobias Salz |
| Abstract: | This paper presents a dynamic general equilibrium model of a taxi market. The model is estimated using data from New York City yellow cabs. Two salient features by which most taxi markets deviate from the efficient market ideal are, first, matching frictions created by the need for both market sides to physically search for trading partners, and second, regulatory limitations to entry. To assess the importance of these features, we use the model to simulate the effect of changes in entry, alternative matching technologies, and different market density. We use the geographical features of the matching process to back out unobserved demand through a matching simulation. This function exhibits increasing returns to scale, which is important to understand the impact of changes in this market and has welfare implications. For instance, although alternative dispatch platforms can be more efficient than street-hailing, platform competition is harmful because it reduces effective density. |
| JEL: | J22 L0 L5 L91 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24921&r=pay |
| By: | Chacaltana Janampa, Juan.; Leung, Vicky.; Lee, Miso. |
| Abstract: | This paper focusses on how technologies can enhance the impact of institutional public policies addressing informality. Today, an increasing number of governments are promoting the application of new technologies to simplify and facilitate the transition from the informal to the formal economy. These “e-formality policies”, as in some cases, are related to e-government initiatives. It analyses some emerging public policies or public-sector practices and tools where technologies have already been implemented directly or indirectly for the transition to formality. This raises the questions if these policy innovations will transform the way formalization policies will be implemented in the future. |
| Keywords: | 1, 2, 3 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:994998792502676&r=pay |
| By: | Tadas Limba (Mykolas Romeris University); Mindaugas Kiškis (Mykolas Romeris University); Gintarė Gulevičiūtė (Mykolas Romeris University); Andrius Stasiukynas (Mykolas Romeris University); Tomas Plėta (Mykolas Romeris University); Ieva Juozapavičiūtė (Mykolas Romeris University) |
| Abstract: | Purpose of this paper is to propose a model for assessment of internet marketing efficacy, based on qualitative criteria and building on the theoretical and empirical investigation of various qualitative criteria applicable to internet marketing. The methodological framework used in the investigation is based on theoretical descriptive, comparative, analytical methods. Qualitative empirical study based on expert interviews was also employed. Nine experts of internet marketing and related fields were involved in the study. The aim of qualitative study is to explore the expert opinnions on the qualitative criteria for internet marketing assessment. This feedback helps to identify problems faced by business developing internet marketing campaigns, the steps to be taken further to solve them and advance campaign efficacy. The model integrating the qualitative criteria into the internet marketing assessment is proposed. The paper analyses the creation and application of qualitative criteria of internet marketing, discusses the problems of internet marketing development, proposes the ways how to deal with the emerging problems and presents the qualitative criteria based model for internet marketing assesment. The qualitative study is the main novety of the research and is intended to scrutinise the concept of internet marketing quality and distinguish the qualitative criteria for internet marketing development.The conclusions and recommendations of the research have practical value, which will help in the process of internet marketing quality implementation. |
| Date: | 2018–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01829601&r=pay |
| By: | Lori Beaman; Ariel BenYishay; Jeremy Magruder; Ahmed Mushfiq Mobarak |
| Abstract: | In order to induce farmers to adopt a productive new agricultural technology, we apply simple and complex contagion diffusion models on rich social network data from 200 villages in Malawi to identify seed farmers to target and train on the new technology. A randomized controlled trial compares these theory-driven network targeting approaches to simpler strategies that either rely on a government extension worker or an easily measurable proxy for the social network (geographic distance between households) to identify seed farmers. Our results indicate that technology diffusion is characterized by a complex contagion learning environment in which most farmers need to learn from multiple people before they adopt themselves. Network theory based targeting can out-perform traditional approaches to extension, and we identify methods to realize these gains at low cost to policymakers. |
| JEL: | O13 O33 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24912&r=pay |
| By: | Jyldyz Djumalieva1; Cath Sleeman |
| Abstract: | In this work we offer an open and data-driven skills taxonomy, which is independent of ESCO and O*NET, two popular available taxonomies that are expert-derived. Since the taxonomy is created in an algorithmic way without expert elicitation, it can be quickly updated to reflect changes in labour demand and provide timely insights to support labour market decision-making. Our proposed taxonomy also captures links between skills, aggregated job titles, and the salaries mentioned in the millions of UK job adverts used in this analysis. To generate the taxonomy, we employ machine learning methods, such as word embeddings, network community detection algorithms and consensus clustering. We model skills as a graph with individual skills as vertices and their co-occurrences in job adverts as edges. The strength of the relationships between the skills is measured using both the frequency of actual co-occurrences of skills in the same advert as well as their shared context, based on a trained word embeddings model. Once skills are represented as a network, we hierarchically group them into clusters. To ensure the stability of the resulting clusters, we introduce bootstrapping and consensus clustering stages into the methodology. While we share initial results and describe the skill clusters, the main purpose of this paper is to outline the methodology for building the taxonomy. |
| Keywords: | Skills, Skills taxonomy, Labour demand, Online job adverts, Big data, Machine learning, Word embeddings |
| JEL: | C18 C38 J23 J24 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:escoed:escoe-dp-2018-13&r=pay |