nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2019‒02‒04
seventeen papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. Do digital information technologies help unemployed job seekers find a job? Evidence from the broadband internet expansion in Germany By Gürtzgen, Nicole; Diegmann (né Nolte), André; Pohlan, Laura; van den Berg, Gerard J.
  2. Inside the engine room of digital platforms: Reviews, ratings, and recommendations By Paul Belleflamme; Martin Peitz
  3. Market Efficiency and Volatility Persistence of Cryptocurrency during Pre- and Post-Crash Periods of Bitcoin: Evidence based on Fractional Integration By Yaya, OlaOluwa S; Ogbonna, Ephraim A; Mudida, Robert
  4. Recent finance advances in information technology for inclusive development: a systematic review By Asongu, Simplice; Nwachukwu, Jacinta
  5. The Impact of Automation in Developed Countries By Alejandro Micco
  6. A Fresh Look at Zero-Rating By Jan Krämer; Martin Peitz
  7. Managing Competition on a Two-Sided Platform By Paul Belleflamme; Martin Peitz
  8. Digital Cash: Principles & Practical Steps By Michael D. Bordo; Andrew T. Levin
  9. Platform Competition: Who Benefits from Multihoming? By Paul Belleflamme; Martin Peitz
  10. Technological Unemployment Revisited: Automation in a Search and Matching Framework By Cords, Dario; Prettner, Klaus
  11. Fighting Mobile Crime By Rosario Crinò; Giovanni Immordino; Salvatore Piccolo
  12. The influence of device characteristics on data collection using a Mobile App. By Read, Brendan
  13. The Fine Print in Smart Contracts By Joshua S. Gans
  14. Effect of Online Systems Quality, Banking Service Product Quality and Customer Trust on the Success of BRI Syari'ah E-Banking Information System By Karmawan, Karmawan; Suhaidar, Suhaidar
  15. Online Reputation Mechanisms and the Decreasing Value of Chain Affliation By Hollenbeck, Brett
  16. Digital Government: ICT and Public Sector Management in Africa By Evans, Olaniyi

  1. By: Gürtzgen, Nicole (Institute for Employment Research); Diegmann (né Nolte), André (Centre for European Economic Research (ZEW) and Institute for Employment Research (IAB)); Pohlan, Laura (Centre for European Economic Research (ZEW) and Institute for Employment Research (IAB)); van den Berg, Gerard J. (University of Bristol, IFAU Uppsala, IZA, ZEW, CEPR and CESifo)
    Abstract: This paper studies effects of the introduction of a new digital mass medium on reemployment of unemployed job seekers. We combine data on high-speed (broadband) internet availability at the local level with German individual register data. We address endogeneity by exploiting technological peculiarities that affected the roll-out of high-speed internet. The results show that highspeed internet improves reemployment rates after the first months in unemployment. This is confirmed by complementary analyses with individual survey data suggesting that internet access increases online job search and the number of job interviews after a fewmonths in unemployment.
    Keywords: Unemployment; online job search; information frictions; matching technology; search channels
    JEL: C26 H40 J64 K42 L96
    Date: 2018–11–30
  2. By: Paul Belleflamme; Martin Peitz
    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
    JEL: L15 L81 L86 D82 D85
    Date: 2018–02
  3. By: Yaya, OlaOluwa S; Ogbonna, Ephraim A; Mudida, Robert
    Abstract: This paper investigates both market efficiency and volatility persistence in 12 cryptocurrencies during pre-crash and post-crash periods. We were motivated by the erroneous belief of some authors that driving currency, Bitcoin is inefficient. By considering robust fractional integration methods in linear and nonlinear set up, we found that markets of Bitcoin and most altcoins considered in our samples can be dubbed as efficient, and these are highly volatile particularly in the post-crash sample that we are now. These volatilities will then persist for shorter period than in the pre-crash period. Our work therefore renders important information to cryptocurrency market participants and portfolio managers.
    Keywords: Bitcoin; Cryptocurrency; Market efficiency; Fractional integration; Virtual currency
    JEL: C2 C22
    Date: 2019–01–13
  4. By: Asongu, Simplice; Nwachukwu, Jacinta
    Abstract: The overarching question tackled in this paper is: to what degree has financial development contributed to providing opportunities of human development for those on low-incomes and by what information technology mechanisms? We systematically review about 180 recently published papers to provide recent information technology advances in finance for inclusive development. Retained financial innovations are structured along three themes. They are: (i) the rural-urban divide, (ii) women empowerment and (iii) human capital in terms of skills and training. The financial instruments are articulated with case studies, innovations and investment strategies with particular emphasis, inter alia on: informal finance, microfinance, mobile banking, crowdfunding, microinsurance, Islamic finance, remittances, Payment for Environmental Services (PES) and the Diaspora Investment in Agriculture (DIA) initiative.
    Keywords: Finance; Inclusive Growth; Economic Development
    JEL: G20 I10 I20 I30 O10
    Date: 2018–01
  5. By: Alejandro Micco
    Abstract: The digital era is reshaping labor markets. Until now, this has been a developed country type of development. Developing countries, and in particular, Latin American economies are behind in terms of the adoption of labor-replacing technologies. But this delay does not mean these technologies are not having an impact on LAC. New technologies are reshaping trade, and therefore are already affecting developing countries through this channel. We study the impact of automation process in 19 lead countries on Latin American Exports to these nations. We find that imports of lead countries in sectors prone to adopt labor-replacing technologies grew around 40% less than others sectoral imports from LAC in the last 14 years.
    Date: 2019–01
  6. By: Jan Krämer; Martin Peitz
    Abstract: We provide an economic assessment of zero-rating offers in the context of mobile internet access services and draw six lessons: (1) Zero-rating can have several different characteristics that crucially affect their economic and welfare assessment. Thus, regulatory interventions must be based on a careful case-by-case analysis. (2) In the context of zero-rating offers, it is often crucial to evaluate the extent to which users are able to activate and deactivate a (throttled) zero-rated tariff option. If activation/deactivation is easy and instantaneous, a sound economic theory of harm for consumers will in many cases be hard to establish. (3) Similarly, if access to zero-rated partner programs is non-discriminatory and entails low barriers to entry, a sound theory of harm for content providers will usually not be given. (4) Zero-rating can be beneficial for consumers and (legal) content providers alike by contributing to a reduction of illegal content. Combined with throttling it can mitigate congestion problems. However, by requiring all content belonging to the same content category to be treated equally with respect to throttling, independent of whether a content provider opted for zero-rating or not, the existing regulation creates a negative externality on those content providers that do not wish to be zero-rated for some reason. (5) Particular attention should be paid to the impact of throttled zero-rating tariffs on the competition between mobile network operators (MNOs) and MVNOs. The latter may not be able to compete on equal footing with MNOs, because they benefit less from the traffic management aspects of zero-rating. (6) Competition among (infrastructure-based) ISPs provides a safeguard against severe rent extraction and, thus, an abuse of throttling and zero-rating as an exploitative device. Therefore, regulators should carefully account for the competitive environment and the existing tariff portfolio and options before deciding to intervene. Competition policy, rather than ex-ante regulation, may be more suitable for this task.
    Keywords: Zero-rating, net neutrality, throttling, traffic management, mobile communications
    JEL: L51 L86
    Date: 2018–06
  7. By: Paul Belleflamme; Martin Peitz
    Abstract: On many two-sided platforms, users on one side not only care about user participation and usage levels on the other side, but they also care about participation and usage of fellow users on the same side. Most prominent is the degree of seller competition on a platform catering to buyers and sellers. In this paper, we address how seller competition affects platform pricing, product variety, and the number of platforms that carry trade.
    Keywords: Network effects, two-sided markets, platform competition, intermediation, pricing, imperfect competition
    JEL: D43 L13 L86
    Date: 2018–07
  8. By: Michael D. Bordo; Andrew T. Levin
    Abstract: If the global economy encounters another severe adverse shock in coming years, will major central banks be able to provide sufficient monetary stimulus to preserve price stability and foster economic recovery? Our empirical analysis indicates that the Federal Reserve’s QE3 program was not an effective form of monetary stimulus and that unconventional monetary policies undertaken in the Eurozone and in Japan have been similarly limited in impact. We then consider how digital cash could bolster the effectiveness of monetary policy, and we characterize some potential steps for implementing digital cash via public-private partnerships between the central bank and supervised financial institutions. Our analysis indicates that digital cash could significantly enhance the stability of the financial system.
    JEL: E42 E52 E58
    Date: 2019–01
  9. By: Paul Belleflamme; Martin Peitz
    Abstract: Competition between two-sided platforms is shaped by the possibility of multihoming. If initially both sides of platform singlehome, each platform provides users on one side exclusive access to its users on the other side. If then one side multihomes, platforms compete on the singlehoming side and exert monopoly power on the multihoming side. This paper explores the allocative effects of such a change from single- to multihoming. Our results challenge the conventional wisdom, according to which the possibility of multihoming hurts the side that can multihome, while benefiting the other side. This in not always true, as the opposite may happen or both sides may benefit.
    Keywords: Network effects, two-sided markets, platform competition, competitive bottleneck, multihoming
    JEL: D43 L13 L86
    Date: 2018–01
  10. By: Cords, Dario; Prettner, Klaus
    Abstract: Will low-skilled workers be replaced by automation? To answer this question, we set up a search and matching model that features two skill types of workers and includes automation capital as an additional production factor. Automation capital is a perfect substitute for low-skilled workers and an imperfect substitute for high-skilled workers. Using this type of model, we show that the accumulation of automation capital decreases the labor market tightness in the low-skilled labor market and increases the labor market tightness in the high-skilled labor market. This leads to a rising unemployment rate and falling wages of low-skilled workers and a falling unemployment rate and rising wages of high-skilled workers. In a cali- bration to German data, we show that one additional industrial robot causes a loss of 1.66 low-skilled manufacturing jobs, whereas the additional robot creates 3.42 high-skilled manufacturing jobs. Thus, overall employment even rises with automation.
    Keywords: unemployment,automation,job search,technological progress,inequality,skill premium
    JEL: C78 J63 J64 O33
    Date: 2019
  11. By: Rosario Crinò; Giovanni Immordino; Salvatore Piccolo
    Abstract: Two countries set their enforcement non-cooperatively to deter native and foreign individuals from committing crime in their territory. Crime is mobile, ex ante (migration) and ex post (fleeing), and criminals hiding abroad after having com- mitted a crime in a country must be extradited back. When extradition is not too costly, countries overinvest in enforcement: insourcing foreign criminals is more costly than paying the extradition cost. When extradition is sufficiently costly, in- stead, a large enforcement may induce criminals to flee the country whose law they infringed. The fear of paying the extradition cost enables the countries coordinating on the efficient outcome.
    Keywords: crime, enforcement, extradition, fleeing, migration
    JEL: K14 K42
    Date: 2019
  12. By: Read, Brendan
    Abstract: Previous research has found differences in survey outcomes on mobile devices and PCs. A wide variety of mobiles devices are used to respond to surveys. Little is known about how differences in mobile devices may affect data quality. Data is from the Understanding Society Spending Study One, an app-based study asking participants to take pictures of receipts or submit information about purchases. Results suggest some survey outcomes can be strongly affected by the device used. Important device characteristics affecting data quality were whether the device was a tablet or smartphone, the operating system, and the amount of Random-Access Memory. Â
    Date: 2019–01–23
  13. By: Joshua S. Gans
    Abstract: One of the purported benefits of blockchain technologies is the ability to house what have been termed ‘smart’ contracts. Such contracts are potentially self-executing depending on the state of information recorded on a blockchain ledger. This paper examines the capabilities of smart contracts from an economic perspective. It is demonstrated that by improving observability and reducing the costs of verification of contract obligation performance, the space of feasible contracts can be enlarged. Moreover, by providing commitments to various monetary payments, a blockchain can potentially create a foundation to house certain mechanisms that have been shown to overcome difficulties of contractual incompleteness. This is demonstrated using a simple international trade environment. Thus, even though smart contracts must respect the incentives of decision-makers in their obligations, they have the potential to use easily verifiable elements to create incentives to reduce hold-up and other contractual difficulties.
    JEL: D86 K12
    Date: 2019–01
  14. By: Karmawan, Karmawan; Suhaidar, Suhaidar
    Abstract: This study will discuss and to find out and test whether Online Systems Quality, Banking Service Product Quality and Customer Trust are thought to influence the Success of E-Banking Information System in one of the Shariah Banks in Pangkalpinang City. This research is quantitative research, using primary data, the instrument used is a questionnaire given to respondents. The population in this study is the Customer of BRI Bank Syari'ah PangkalPinang Branch, while the sampling technique used is convenience sampling technique. The data of this study will be processed and analyzed by Multiple Linear Regression tests with the aim to find out how far the knowledge and level of understanding of Online Systems Quality, Banking Service Product Quality and Customer Trust are thought to influence the success of E-Banking Information System in BRI Sharia Banks in Pangkalpinang.
    Keywords: online systems quality; product quality banking service; customer trust; e-banking information system
    JEL: G21 L15
    Date: 2019–01–05
  15. By: Hollenbeck, Brett
    Abstract: This paper investigates the value of branding and how it is changing in response to a large increase in consumer information provided by online reputation mechanisms. As an application of umbrella branding, theory suggests much of the value to firms of chain affiliation results from asymmetric information between buyers and sellers. As more information becomes available, consumers should rely less on brand names as quality signals and the ability for firms to extend reputations across heterogenous outlets should decrease. To examine this empirically, this paper combines a large, 15 year panel of hotel revenues with millions of online reviews from multiple platforms and performs a machine learning analysis of review text to recover latent, time-varying dimensions of firm quality. I find that branded, or chain-affiliated, hotels earn substantially higher revenues than equivalent independent hotels, but that this premium has declined by over 50% from 2000 to 2015. I find that this can be largely attributed to an increase in online reputation mechanisms, and that this affect is largest for low quality and small market firms. Numerous measures of the information content of online reviews show that as information has increased, independent hotel revenue grows substantially more than chain hotel revenue. Finally, the correlation between firm revenue and brand-wide reputation is decreasing and the correlation with individual hotel reputation is replacing it.
    Keywords: Online Reviews, Branding, Text Analysis, Franchising
    JEL: L15 L22
    Date: 2018–10
  16. By: Evans, Olaniyi
    Abstract: This study examines the effect of information and communication technologies (ICT) on public sector management in Africa for the period 1995–2015 using panel GMM model and Toda-Yamamoto causality tests. The empirical evidence shows that ICT has a positive and statistically significant effect on public sector management, meaning that an increase in ICT is associated with improved public sector management. There is also a bi-directional causality between ICT and public sector management, suggesting that ICT spurs public sector management which, in turn, spurs ICT even further. The public sector, civil society and international actors therefore have the responsibility to collaborate at developing policies and applications that will maximize the potentials of digital government to every level of public sector in Africa.
    Keywords: Digital Government; ICT; Public Sector Management; public value; e-government
    JEL: H0 H00 H5 H54
    Date: 2018
  17. By: Roman N. Bozhya-Volya (National Research University Higher School of Economics); Alina S. Rybak (National Research University Higher School of Economics)
    Abstract: We investigate new instrument of monetary policy which is able to stimulate economy in the age of electronic money. Demurrage (negative interest on money holdings) is a non inflationary monetary instrument that is able to boost the rate of economic transactions. We show with the search-theoretic model that the search effort of buyers is increasing in demurrage fees and higher search effort is associated with the lower price level and higher aggregate output. We find that aggregate welfare is higher when demurrage is imposed compared to quantitative easing policy. While demurrage is complicated to impose on banknotes it is easily set on electronic money which makes this unconventional policy measure more technologically feasible
    Keywords: demurrage, negative interest on money, monetary policy, government policy in recession
    JEL: E50
    Date: 2019

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