nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2018‒09‒17
twenty-one papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. The economic potential and risks of crypto assets: is a regulatory framework needed? By Maria Demertzis; Guntram B. Wolff
  2. Evolutionary dynamics of cryptocurrency transaction networks: An empirical study By Jiaqi Liang; Linjing Li; Daniel Zeng
  3. Using Trust Agent as Strategy by Retailers to Investigate Potential and Existing Customers in Nigeria E-Commerce Industry. By Johnson Wewinghipere Kenigua
  4. THE INFLUENCE OF TRUST ON SOCIAL COMMERCE INTENT OF INSTAGRAM USERS By Ça?atan Ta?k?n; Dilek Ta?k?n; Ahmet Akif Karadamar; Onur Öztürk
  5. Testing for bubbles in cryptocurrencies with time-varying volatility By HAFNER Christian,
  6. Inducing Exploration in Service Platforms By Bimpikis, Kostas; Papanastasiou, Yiangos
  7. Bridging the gender digital gap By Mariscal Avilés, Judith; Mayne, Gloria; Aneja, Urvashi; Sorgner, Alina
  8. Virtual currencies and their potential impact on financial markets and monetary policy By Marek Dabrowski; Lukasz Janikowski
  9. Investigating the role of content based social media marketing in building customer loyalty and motivating users to forward content By Umer Ramzan
  10. Forecasting short-term transaction fees on a smart contracts platform By Charles Hoffreumon; Nicolas van Zeebroeck
  11. The difficulties of becoming an E- patient from Google ? patient. A qualitative research in Hungary. By Éva Málovics
  12. Banks, money and the zero lower bound By Kumhof, Michael; Wang, Xuan
  13. Rural Economy in the Digital Age By Stenberg, Peter
  14. USING A SMARTPHONE APP TO COLLECT DATA ON SMALLHOLDER FARMING SYSTEMS IN ZAMBIA By Daum, Thomas; Buchwald, Hannes; Gerlicher, Ansgar; Birner, Regina
  15. Mobile advertising: the effect of tablet tilt angle on user’s purchase intentions By Caroline Ardelet
  16. Does the internet increase the job finding rate? Evidence from a period of internet expansion By Manuel Denzer; Thorsten Schank
  17. Market Expanding or Market Stealing? Platform Competition in Bike-Sharing By Guangyu Cao; Ginger Zhe Jin; Li-An Zhou
  18. Financial Access Under the Microscope By Camelia Minoiu
  19. Economists (and Economics) in Tech Companies By Susan Athey; Michael Luca
  20. Can Mobile Phones Contribute To Gender Equity And Improved Nutrition In Smallholder Farm Households? Panel Data Evidence from Uganda By Sekabira, Haruna; Qaim, Matin
  21. The Importance of E-Connectivity By Hance, Robert L.

  1. By: Maria Demertzis; Guntram B. Wolff
    Abstract: This Policy Contribution is a version of a paper written at the request of the Austrian Presidency of the Council of the European Union for the informal ECOFIN meeting of EU finance ministers and central bank governors (September 2018). We analyse and assess the economic potential and risk of crypto assets and discuss key regulatory questions that European Union policymakers need to confront. Crypto assets can be broadly classified as cryptocurrencies – a private means of payment – and initial coin offerings (ICOs), typically used to fund new activities against the promise of future utilities (utility tokens) or financial returns (securities tokens). Crypto exchanges and wallets provide services such as exchanging crypto assets into central bank currencies and brokerage services. The underlying technologies – record keeping in distributed ledgers and blockchain – facilitate peer-to-peer interactions without intermediaries and are still experimental. They have been praised as offering benefits for many applications beyond finance, but there is also significant scepticism. The crypto asset market has seen huge variation in its market valuation. After a peak of above $800 billion (January 2018), it fell to around US$200 billion (August 2018). Cryptocurrencies such as bitcoin have dropped markedly in value. The amount of funds raised through ICOs has also declined substantially since its March 2018 peak. Regulators and supervisors have taken great interest in these new markets. Different regulators in Europe classify and treat cryptocurrencies differently. Some classify cryptocurrency as a unit of account while others reject it as a financial instrument. Several regulators take the view that case-by-case assessments of ICOs are necessary. There seems to be convergence on the view that crypto exchanges and wallet providers should require authorisation to operate. Crypto assets raise six major public policy questions - how great is the potential of crypto assets in advanced financial systems? What is the best way to combat illegal activity such as money laundering and terrorism finance? How can consumer and investor protection be ensured? What about financial stability? How might crypto assets be taxed? And how can blockchain applications be embedded into the existing legal framework? European policymakers must first decide whether crypto assets should be isolated, regulated or integrated. We argue that at this point regulation is the right approach. Second, global cooperation in the managing risks of the new technology should be ensured while reaping the opportunities it undoubtedly provides. The G20 and the Financial Stability Board should set regulatory norms that address the six policy questions. Standard-setting organisations such as the International Organisation for Standardization should also play a role. Third, EU policymakers need to agree on the right moment to move supervision of crypto assets from the national level to the EU level. In a single market for capital, diverging supervisory practices can come with significant downsides and this is particularly true for highly mobile crypto assets. However, different supervisory practices can allow experimentation with different approaches to a fast-changing technology. Download the online annex.
    Date: 2018–09
  2. By: Jiaqi Liang; Linjing Li; Daniel Zeng
    Abstract: Cryptocurrency is a well-developed blockchain technology application that is currently a heated topic throughout the world. The public availability of transaction histories offers an opportunity to analyze and compare different cryptocurrencies. In this paper, we present a dynamic network analysis of three representative blockchain-based cryptocurrencies: Bitcoin, Ethereum, and Namecoin. By analyzing the accumulated network growth, we find that, unlike most other networks, these cryptocurrency networks do not always densify over time, and they are changing all the time with relatively low node and edge repetition ratios. Therefore, we then construct separate networks on a monthly basis, trace the changes of typical network characteristics (including degree distribution, degree assortativity, clustering coefficient, and the largest connected component) over time, and compare the three. We find that the degree distribution of these monthly transaction networks cannot be well fitted by the famous power-law distribution, at the same time, different currency still has different network properties, e.g., both Bitcoin and Ethereum networks are heavy-tailed with disassortative mixing, however, only the former can be treated as a small world. These network properties reflect the evolutionary characteristics and competitive power of these three cryptocurrencies and provide a foundation for future research.
    Date: 2018–08
  3. By: Johnson Wewinghipere Kenigua (Ritsumeikan Asian Pacific University)
    Abstract: The trend in technology has shifted to internet base whereby the majority of activities take place ranging from government data storage, educational portal, medical, banking, online retail shopping etc. are all the talk of the century with the digital age. This trend comes with its own advantages and disadvantages facing it and there is no actual framework to curtail its excesses and check irregularities. Nigeria has become a phenomenon character when it comes to online crimes and other fraudulent activities causing damages to her wellbeing among the community of nations even with her vast human resources and natural resources surplus in the country but due to various situations like corruption and lack of infrastructure has caused brain drain and others into various illegal activities. This research investigates trust building ?Using Trust Agent as Strategy by Retailers to Investigate Potential and Existing Customers in Nigeria E-commerce Industry?. Various factors were considered in trust building not just human perspectives, they are; Infrastructure; Security, Fraud and Hacking; National Culture; Consumer Perspective; Perceived Quality; Critical Success Factor; Delivery System. The integration of both ITC and management/marketing concept was looked upon to find the out the growth of e-commerce and to build trust among consumers in the industry in Nigeria. A model was developed and with the help of a questionnaire, we were able to analyze using SPSS tool to validate the theoretical model. The study found out the main issue of trust depends on the factors on grounds not the consumers but how good infrastructures that burst the e-commerce industry are put in place by both vendors and government agencies by protecting consumers and vendors in the industry which can freely access any website by using their credit cards, debit cards etc. knowing they are well protected without any fear or doubt. Further studies are suggested in the area of payments and delivery issues by introducing more technological innovation in Nigeria to burst the growth of e-commerce.
    Keywords: E-commerce, Consumer Trust-building, Technology Acceptance Model (TAM), Theory of Reason Action (TRA)
    JEL: O32
    Date: 2018–06
  4. By: Ça?atan Ta?k?n (Uluda? University); Dilek Ta?k?n (Uluda? University); Ahmet Akif Karadamar (Uluda? University); Onur Öztürk (Uluda? University)
    Abstract: Social commerce is a new form of social media-mediated commerce that allows customers to participate actively in the marketing and selling of products in online marketplaces. Social media such as Instagram provides a digital trade platform for their users. It is important for social commerce vendors to know the antecedents of social commerce intent. Trust is one of the important antecedents and it is also critical to build trust. The aim of this study is to propose and validate a research model including trust and its antecedents (product differentiation and reputation) and measure the influence of trust on social commerce intent on Instagram users by means of PLS-Sem. The research sample consists of Instagram users who bought anything from Instagram in the last three months. Data were collected in the months of December of 2017 and January of 2018. A total of 289 survey responses from participants, were collected. Based on the initial screening of the collected questionnaires, 31 of them were excluded as they were inappropriate. This study provides useful implications for both academics and practitioners in digital economy. PLS-Sem method was used to test the research model. The scale of Yahia et al. (2018) was adapted for all of the antecedents. The findings of the research showed that all of the antecedents were found to have statistically significant influence on social commerce intent of Instagram users. According to the modelling results several digital marketing strategies were proposed.
    Keywords: Instagram, Trust, Social commerce intent, PLS-Sem, Turkey.
    JEL: M30 M31
    Date: 2018–06
  5. By: HAFNER Christian, (CORE and ISBA, UCLouvain)
    Abstract: The recent evolution of cryptocurrencies has been characterized by bubble-like behavior and extreme volatility. While it is difficult to assess an intrinsic value to a specific cryptocurrency, one can employ recently proposed bubble tests that rely on recursive applications of classical unit root tests. This paper extends this approach to the case where volatility is time varying, assuming a deterministic long-run component that may take into account a decrease of unconditional volatility when the cryptocurrency matures with a higher market dissemination. Volatility also includes a stochastic short-run component to capture volatility clustering. The wild bootstrap is shown to correctly adjust the size properties of the bubble test, which retains good power properties. In an empirical application using eleven of the largest cryptocurrencies and the CRIX index, the general evidence in favor of bubbles is confirmed, but much less pronounced than under constant volatility.
    Keywords: cryptocurrencies; speculative bubbles; wild bootstrap; volatility
    JEL: C14 C43 Z11
    Date: 2018–07–25
  6. By: Bimpikis, Kostas (Stanford University); Papanastasiou, Yiangos (University of California, Berkeley)
    Abstract: Crowd-sourced content in the form of online product reviews or recommendations is an integral feature of most Internet-based service platforms and marketplaces, including Yelp, TripAdvisor, Netflix, and Amazon. Customers may find such information useful when deciding between potential alternatives; at the same time, the process of generating such content is mainly driven by the customers' decisions themselves. In other words, the service platform or marketplace "explores" the set of available options through its customers' decisions, while they "exploit" the information they obtain from the platform about past experiences to determine whether and what to purchase. Unlike the extensive work on the trade-off between exploration and exploitation in the context of multi-armed bandits, the canonical framework we discuss in this chapter involves a principal that explores a set of options through the actions of self-interested agents. In this framework, the incentives of the principal and the agents towards exploration are misaligned, but the former can potentially incentivize the actions of the latter by appropriately designing a payment scheme or an information provision policy.
    Date: 2018–05
  7. By: Mariscal Avilés, Judith; Mayne, Gloria; Aneja, Urvashi; Sorgner, Alina
    Abstract: Despite the headway the world has experienced over the last couple of years in terms of a substantial increase in digital access; there are still significant challenges to overcome in ensuring women are included in the transformation to a digital society, which in turn will enhance productivity and social development. Efforts to increase internet adoption access through broadband plans and legislative reforms have yielded improvements in use and adoption. However, there is still a stark and pervasive gender inequality in terms of access, ownership of digital devices, digital fluency as well as the capacity to make meaningful use of the access to technology. Even though affordability is a key source of exclusion, there are also significant socio-cultural norms that restrict access for women. This policy brief brings forward the argument that access alone is not enough, women need agency and capacity to leverage access. The authors thus highlight the need to make an assessment of the global gender gap and develop meaningful indicators that contribute to the design and implementation of effective policies that drive adoption. We need effective promotion of women's digital adoption not only from the government but also from the private sector and civil society in order to lead the digital adoption of best practices for women around the world.
    Keywords: digital gender gap,digital inclusion,digital skills
    JEL: J16 J24 O30
    Date: 2018
  8. By: Marek Dabrowski; Lukasz Janikowski
    Abstract: Virtual currencies are a contemporary form of private money. Thanks to their technological properties, their global transaction networks are relatively safe, transparent, and fast. This gives them good prospects for further development. However, they remain unlikely to challenge the dominant position of sovereign currencies and central banks, especially those in major currency areas. As with other innovations, virtual currencies pose a challenge to financial regulators, in particular because of their anonymity and trans-border character.
    Keywords: virtual currency, private money, sovereign currency, free banking, monetary policy, central bank, financial regulation, financial market, currency substitution
    JEL: E42 E58 F31 G18 G28 N21 N23
    Date: 2018
  9. By: Umer Ramzan (University of Lahore)
    Abstract: The effectiveness of content on social media allows businesses to establish lasting relationships with their audience. It highlights the competence of a business and allows a firm to gain the trust of their audience by providing them the content they value. Well designed content also enables a website or social media presence to attract traffic and improve its google search ranking. It also motivates a user to share content with others. The concept of content-based social media marketing is very important and taking much concentration due to increasing trend of using social media and what drives customers to share the content and what kind of trust lead them to do so. A carefully planned content marketing strategy may help a company to get positive responses from consumers and maintain strong relationships with them by gaining their trust in terms of providing them a solution to what they are looking for. The study has investigated that how the right content of social media can increase customer loyalty and motivation to forward content through customer engagement and customer trust. Is there any impact of content on all these variables or not. For measuring the impact of content on social media marketing, this study collected data from people who use social media platforms and 200 respondents were selected with a questionnaire of 49 questions. The research includes that there is a positive impact of content-based social media marketing on increasing customer loyalty and motivation to forward content along with the mediating mechanisms of customer engagement and trust. Trust enables customers to share the content due to a high level of engagement.
    Keywords: Content Marketing, Social Media Marketing, Customer Trust, Customer Engagement, Customer Loyalty
    Date: 2018–07
  10. By: Charles Hoffreumon; Nicolas van Zeebroeck
    Abstract: In the present article, we analyze the transaction fees market on smart contracts-enabling blockchains. On such systems, as opposed to traditional on-premise and cloud computing solutions, users are effectively competing for computational resources through an auction for priority. This paper proposes a way to estimate the bid one has to offer to have a transaction included in the next block. This method outperforms naive bidding (bidding the optimal value of the last block) if the user is realistically "impatient" to have a transaction processed. It also shows that users collectively spend several million of dollar every years for transaction fees that could be avoided without degrading the service received. This is this "waste" we seek to reduce throughour forecasting method.
    Keywords: Blockchain, Auctions, Forecasting, Transaction Fees, Smart Contracts
    Date: 2018–09
  11. By: Éva Málovics (University of Szeged)
    Abstract: Information technology is changing rapidly worldwide and so the communication. According to the literature the digital revolution will have a huge impact on how physicians interact with patients. The internet has become a powerful healthcare tool for a lot of people. As a result of these changes e-patient movement has evolved. These changes will have an important affect on the doctor ? patient communication and the direction of these relationship became a fundamental question. According to the literature the paternalist physician - patient communication should be replaced by a common decision however, this process requires significant change of attitude from both the patient and the physician.We made in-depth interviews with five patients with serious illness and with five doctors. We used the grounded theory method for analyzing data about the doctor ? patient communication. From the results we can see, that there are many appearances of needs to becomes from google patient to e-patient but the habitual barriers of paternalistic doctor-patient communication overwrite this efforts.
    Keywords: E-patient, paternalistic communication,shared decisionmaking
    JEL: A19
    Date: 2018–07
  12. By: Kumhof, Michael (Bank of England); Wang, Xuan (University of Oxford)
    Abstract: We study a New Keynesian model where banks create deposits through loans, subject to increasing marginal cost of lending. Banks do not intermediate commodity deposits between savers and borrowers, instead they offer a payment system that intermediates ledger-entry deposits between different spenders. We discuss three implications. First, non-banks’ aggregate purchasing power consists not only of their income but also of new loans/deposits. Second, near the ZLB policy rate reductions compress spreads, and thereby reduce bank profitability, deposit creation and output. Third, near the ZLB Phillips curves are flatter, because lower factor cost inflation is partly offset by inflationary credit rationing.
    Keywords: Banks; financial intermediation; endogenous money creation; bank loans; bank deposits; money demand; deposits-in-advance; Phillips curve; zero lower bound; monetary policy rules.
    JEL: E41 E44 E51 G21
    Date: 2018–08–24
  13. By: Stenberg, Peter
    Keywords: Research and Development/Tech Change/Emerging Technologies
  14. By: Daum, Thomas; Buchwald, Hannes; Gerlicher, Ansgar; Birner, Regina
    Abstract: One challenge of collecting socioeconomic data, such as data on time use, is recall biases. While time-use researchers have continuously developed new methods to make data collection more accurate and easy, these methods are difficult to use in developing countries, where study participants may have low literacy levels and no “clock”-based concepts of time. To contribute to the closing of this research gap, we developed a picture-based smartphone app called “Time-Tracker” that allows data recording in real time to avoid recall biases. We pilot tested the app in rural Zambia, collecting 2790 data days. In this paper, we compare the data recorded with the app to data collected with 24-hours recall questions. The results confirm the literature on recall biases, suggesting that using the app leads to valid results. We conclude that smartphone apps using visual tools provide new opportunities for researchers collecting socioeconomic data in developing countries.
    Keywords: Agribusiness, Labor and Human Capital, Productivity Analysis
    Date: 2018–09–01
  15. By: Caroline Ardelet (CEROS - Centre d'Etudes et de Recherches sur les Organisations et la Stratégie - UPN - Université Paris Nanterre)
    Abstract: With the advent of mobile screens, online advertisements are viewed on screens held in various positions, from horizontal (such as when the tablet is rested on a table or on the knees) to vertical (when placed on an easel, for example), allowing the viewer to see the advertisement in different body postures. Based on the theory of embodied cognition (Barsalou, 2008), we present two experimental studies in which we show that mobile device tilt angle impacts purchase intention of advertised products, that purchase intention is increased when device tilt angle allows viewers to stand in a body posture that is consistent with the image perspective, and that mental simulation process mediates this effect. The results contribute to a better understanding of the conditions of advertising effectiveness on mobile devices.
    Keywords: mobile,internet,body,position,perspective,tilt angle
    Date: 2018
  16. By: Manuel Denzer (Johannes Gutenberg-University); Thorsten Schank (Johannes Gutenberg-University)
    Abstract: We examine the impact of household access to the internet on job finding rates in Germany during a period (2006-2009) in which internet access increased rapidly, and job-seekers increased their use of the internet as a search tool. During this period, household access to the internet was almost completely dependent on connection to a particular technology (DSL). We therefore exploit the variation in connection rates across municipalities as an instrument for household access to the internet. OLS estimates which control for differences in individual and local area characteristics suggest a job-finding advantage of about five percentage points. The IV estimates are substantially larger, but much less precisely estimated. However, we cannot reject the hypothesis that, conditional on observables, residential computer access with internet was as good as randomly assigned with respect to the job-finding rate. The hypothesis that residential internet access helped job-seekers find work because of its effect on the job search process is supported by the finding that residential internet access greatly increased the use of the internet as a search method. We find some evidence that household access to the internet reduced the use of traditional job search methods, but this effect is outweighed by the increase in internet-based search methods.
    Keywords: Job search, unemployment, job nding rate, internet, DSL
    Date: 2018–08–20
  17. By: Guangyu Cao; Ginger Zhe Jin; Li-An Zhou
    Abstract: The recent rise of dockless bike-sharing is dominated by two platforms: one started first in 82 Chinese cities, 59 of which were subsequently entered by the second platform. Using these variations, we study how the entrant affects the incumbent’s market performance. To our surprise, the entry expands the market for the incumbent, not only boosting its total number of trips but also allowing the incumbent to achieve higher revenue per trip, improve bike utilization rate, and form a wider and more evenly distributed network. These market expansion effects dominate a significant market-stealing effect on the incumbent’s old users. Our findings suggest that platform entry can divert the perceived path to winners-take-all in a market with positive network effects, and competition with the outside goods is at least as important as the competition between platforms, especially when users multi-home across compatible networks.
    JEL: D22 L1 L4 L9 R4
    Date: 2018–08
  18. By: Camelia Minoiu
    Abstract: We examine the impact of a large-scale microcredit expansion program on financial access and the transition of previously unbanked borrowers to commercial banks. Administrative data on the universe of loans to individuals show that the program improved access to credit, especially in underdeveloped areas. A sizeable share of first-time borrowers who need a second loan switch from microfinance institutions to commercial banks, which cream-skim low-risk borrowers and grant them larger, cheaper, and longer-term loans. These borrowers are not riskier than those already at commercial banks. The microfinance sector, together with well-functioning credit reference bureaus, help mitigate information frictions in credit markets.
    Keywords: Financial inclusion, microfinance, loan expansion programs, credit reference bureau
    JEL: G21 O12 O55
    Date: 2018–09
  19. By: Susan Athey (Stanford Graduate School of Business); Michael Luca (Harvard Business School, Negotiation, Organizations & Markets Unit)
    Abstract: As technology platforms have created new markets and new ways of acquiring information, economists have come to play an increasingly central role in tech companies - tackling problems such as platform design, strategy, pricing, and policy. Over the past five years, hundreds of PhD economists have accepted positions in the technology sector. In this paper, we explore the skills that PhD economists apply in tech companies, the companies that hire them, the types of problems that economists are currently working on, and the areas of academic research that have emerged in relation to these problems.
    Date: 2018–09
  20. By: Sekabira, Haruna; Qaim, Matin
    Abstract: Mobile phone (MP) technologies have been widely adopted in developing countries. Previous research has shown MP use to enhance market access through information exchange and market price integration. However, the impact of MP use on several smallholder welfare aspects has barely been investigated. In particular, we are not aware of any studies that have analyzed the effects of MP use on gender equity and nutrition – two welfare dimensions of particular importance in the context of United Nations’ sustainable development goals (SDGs). We address the gap by using a two wave balanced panel data from smallholder farm households in Uganda to examine the impact of MP use on household incomes, gender, and nutrition. Using regression models, we find that, MP use is positively and significantly associated with improvements in household income, women empowerment, and dietary diversity. Gender disaggregated analysis shows that female MP use bears stronger associations. Female MP Use’s positively associated influences on dietary diversity are channeled through increased incomes and women empowerment. These effects are due to lower transaction costs and better access to information through MP use.
    Keywords: Agricultural and Food Policy, Food Security and Poverty
    Date: 2017–08–28
  21. By: Hance, Robert L.
    Keywords: Resource /Energy Economics and Policy

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.
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