|
on Payment Systems and Financial Technology |
|
Issue of 2019‒04‒22
23 papers chosen by |
| By: | Auer, Raphael (Bank for International Settlements) |
| Abstract: | This paper discusses the economics of how Bitcoin achieves data immutability, and thus payment finality, via costly computations, i.e., “proof-of-work.” Further, it explores what the future might hold for cryptocurrencies modelled on this type of consensus algorithm. The conclusions are, first, that Bitcoin counterfeiting via “double-spending” attacks is inherently profitable, making payment finality based on proof-of-work extremely expensive. Second, the transaction market cannot generate an adequate level of “mining” income via fees as users free-ride on the fees of other transactions in a block and in the subsequent blockchain. Instead, newly minted bitcoins, known as block rewards, have made up the bulk of mining income to date. Looking ahead, these two limitations imply that liquidity is set to fall dramatically as these block rewards are phased out. Simple calculations suggest that once block rewards are zero, it could take months before a Bitcoin payment is final, unless new technologies are deployed to speed up payment finality. Second-layer solutions such as the Lightning Network might help, but the only fundamental remedy would be to depart from proof-of-work, which would probably require some form of social coordination or institutionalisation. |
| Keywords: | cryptocurrencies; crypto-assets; digital currencies; blockchain; proof-of-work; proof-of-stake; distributed ledger technology; consensus; bitcoin; ethereum; money; digitalisation; finance; history of money |
| JEL: | D20 D40 E42 E51 F31 G12 G28 G32 G38 L10 L50 |
| Date: | 2019–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddgw:355&r=all |
| By: | Abozaid, Abdulazeem |
| Abstract: | Undoubtedly, the emergence of cryptocurrencies has imposed upon Shariah scholars the challenge of addressing related Shariah issues and providing Muslims with clear answers as to whether or not they can deal with, or invest in, these currencies. The challenge, however, is in demystifying these currencies and understanding their technicalities and economic implications. Hence, it is necessary to first study the technicalities of these currencies in order to address their various Shariah issues. Cryptocurrencies involve various Shariah matters, including the very permissibility of their issuance in view of the fact that they are not backed by real valuable assets or supervised by governments or financial authorities, such that people dealing with them are vulnerable to possible fraud and manipulative fluctuations in their values. Other Shariah issues also include trading in them and whether or not they are considered as interest-bearing (ribawi) commodities such that the injunctions pertaining to interest (riba) may apply to them, as they apply to conventional currencies. In addition, they have potentially negative implications for the market, such as their use in money laundering, drugs trafficking and other illegal dealings. This paper treats the Shariah aspects of cryptocurrencies. |
| Keywords: | Cryptocurrency, Bitcoin, Shariah rules on Bitcoin, digital money |
| JEL: | K1 K10 O3 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93289&r=all |
| By: | Francesco Decarolis; Maris Goldmanis; Antonio Penta |
| Abstract: | The transition of the advertising market from traditional media to the internet has induced a proliferation of marketing agencies specialized in bidding in the auctions that are used to sell ad space on the web. We analyze how collusive bidding can emerge from bid delegation to a common marketing agency and how this can undermine the revenues and allocative effciency of both the Generalized Second Price auction (GSP, used by Google and Microsoft-Bing and Yahoo!) and the of VCG mechanism (used by Facebook). We nd that, despite its well-known susceptibility to collusion, the VCG mechanism outperforms the GSP auction both in terms of revenues and effciency. |
| Keywords: | Collusion, digital marketing agencies, facebook, Google, GSP, internet auctions, online advertising, VCG |
| JEL: | C72 D44 L81 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1088&r=all |
| By: | Runjie Xu; Chuanmin Mi; Camelia Delcea |
| Abstract: | Internet finance is a new financial model that applies Internet technology to payment, capital borrowing and lending and transaction processing. In order to study the internal risks, this paper uses the Internet financial risk elements as the network node to construct the complex network of Internet financial risk system. Different from the study of macroeconomic shocks and financial institution data, this paper mainly adopts the perspective of complex system to analyze the systematic risk of Internet finance. By dividing the entire financial system into Internet financial subnet, regulatory subnet and traditional financial subnet, the paper discusses the relationship between contagion and contagion among different risk factors, and concludes that risks are transmitted externally through the internal circulation of Internet finance, thus discovering potential hidden dangers of systemic risks. The results show that the nodes around the center of the whole system are the main objects of financial risk contagion in the Internet financial network. In addition, macro-prudential regulation plays a decisive role in the control of the Internet financial system, and points out the reasons why the current regulatory measures are still limited. This paper summarizes a research model which is still in its infancy, hoping to open up new prospects and directions for us to understand the cascading behaviors of Internet financial risks. |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1904.06640&r=all |
| By: | Jon Frost; Leonardo Gambacorta; Yi Huang; Hyun Song Shin; Pablo Zbinden |
| Abstract: | We consider the drivers and implications of the growth of "BigTech" in finance - ie the financial services offerings of technology companies with established presence in the market for digital services. BigTech firms often start with payments. Thereafter, some expand into the provision of credit, insurance, and savings and investment products, either directly or in cooperation with financial institution partners. Focusing on credit, we show that BigTech firms lend more in countries with less competitive banking sectors and less stringent regulation. Analysing the case of Argentina, we find support for the hypothesis that BigTech lenders have an information advantage in credit assessment relative to a traditional credit bureau. For borrowers in both Argentina and China, we find that firms that accessed credit expanded their product offerings more than those that did not. It is too early to judge the extent of BigTech's eventual advance into the provision of financial services. However, the early evidence allows us to pose pertinent questions that bear on their impact on financial stability and overall economic welfare. |
| Keywords: | BigTech, FinTech, credit markets, data, technology, network effects, regulation |
| JEL: | E51 G23 O31 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:779&r=all |
| By: | Matkin, Gary W |
| Abstract: | Alternative Digital Credentials (ADCs) will significantly transform the relationship between higher education institutions and society. By providing fully digital, workplace-relevant, and information-rich records of an individual’s skills and competencies, ADCs will render traditional university transcripts increasingly irrelevant and obsolete. Universities and colleges that to not adopt in some measure the ADC movement will begin to experience a slow decline in market position and patron support. Current usage of ADCs is emerging rapidly in the marketplace and is supported by standard-setting efforts and grant funding. Usage is accelerating due to the inadequacy of the traditional transcription systems, accrediting agency requirements, demographic shifts in learning preferences, open education, and hiring practices, among others. Institutions seeking to enter the ADC movement face challenges including, 1) establishing criteria for the issuance of ADCs, 2) designing icons to represent their ADCs, 3) determining the content disclosed in the ADC, 4) selecting a method (vendor) for implementing ADCs, and 5) considering the pace of technology and the immediate future of the ADC movement, including the advent of blockchain technology. This paper provides a rationale and pathway for the institutional adoption of ADCs. |
| Keywords: | Education |
| Date: | 2018–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:cshedu:qt2tb939dm&r=all |
| By: | Olbert, Marcel; Spengel, Christoph |
| Abstract: | The paper reviews the evidence on the challenges of digitalization for direct (corporate profit) and indirect (consumption) taxation. Based on both anecdotal and empirical evidence, we evaluate ongoing developments at the OECD and European Union level and argue that there is no justification for introducing a new tax order for digital businesses. In particular, the significant digital presence and the digital services tax as put forward by the European Commission will most likely distort corporate decisions and spur tax competition. To contribute to the development of tax rules in line with value creation as the gold standard for profit taxation the paper discusses data as a "new" value-driving asset in the digital economy. It draws on insights from interdisciplinary research to highlight that the value of data emerges through proprietary activities conducted within businesses. We ultimately discuss how existing transfer pricing solutions can be adapted to business models employing data mining. |
| Keywords: | Digital Economy,Corporate Taxation,Business Model Analysis,Data Mining,Tax Planning |
| JEL: | H20 H25 H26 L21 L86 M14 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:19010&r=all |
| By: | António Sousa Mendes (Faculty of Economics, University of Coimbra); Pedro Godinho (CeBER and Faculty of Economics, University of Coimbra) |
| Abstract: | In this paper we introduce NIESIM (Network Information Economics SIMulation), a software for simulating a mobile communications scenario and studying the value of information in the context of mobile network management. The modelling principles and the simulation strategy used to design and develop NIESIM software are introduced, along with simulation results. We consider an application of NIESIM to support the definition of the grade of service in a network that is exposed to failures. An exploratory discussion of the findings and their implications to future work is also presented. |
| Keywords: | Telecommunications, Mobile Networks Management, Value of Information, Simulation. |
| JEL: | C63 D81 L96 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:gmf:papers:2019-03&r=all |
| By: | Toffano, Priscilla; Yuan, Kathy |
| Abstract: | Beginning in 2016, Israeli banks announced their intention to sever correspondent ties with their counterparts in the West Bank, citing risks around money laundering and terror financing. This paper contributes to the discussion about how to save Palestinian/Israeli transactions by proposing a private, permissioned distributed ledger system, jointly owned by the Palestinian and Israeli central banks, where Israeli and Palestinian banks can exchange e-shekels to settle payments. |
| JEL: | F3 G3 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:100470&r=all |
| By: | OECD |
| Abstract: | On 15-16 February 2018 the Organisation for Economic Co-operation and Development (OECD) hosted a Workshop on Digital Security and Resilience in Critical Infrastructure and Essential Services. The workshop brought together over 120 participants to discuss the effects of growing digital transformation on the resilience of critical infrastructures and essential services which rely increasingly on cross-border digital infrastructure. Over 25 experts discussed digital security in the financial, energy and transport sectors, in relation to the delivery of public sector services, and from the digital security public policy making perspective. Issues faced by SMEs were also addressed throughout the event. This report provides key cross-cutting high-level policy messages from the workshop, an issues paper developed to prepare the event, as well as a detailed account of discussions in each session. |
| Date: | 2019–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaab:281-en&r=all |
| By: | Asongu, Simplice A; Odhiambo, Nicholas M |
| Abstract: | This study investigates linkages between the mobile phone, information sharing offices (ISO) and financial sector development in 53 African countries for the period 2004-2011. ISO are private credit bureaus and public credit registries. The empirical evidence is based on contemporary and non-contemporary quantile regressions. Two main hypotheses are tested: mobile phones complement ISO to enhance the formal financial sector (Hypothesis 1) and mobile phones complement ISO to reduce the informal financial sector (Hypothesis 2). The hypotheses are largely confirmed. This research adds to the existing body of literature by engaging hitherto unexplored dimensions of financial sector development and investigating the role of mobile phones in information sharing for financial sector development. |
| Keywords: | Information sharing; Banking sector development; Africa |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:uza:wpaper:25363&r=all |
| By: | Kania, Elsa B. |
| Abstract: | Will the Chinese military succeed in advancing new frontiers of defense innovation? China has already emerged as a powerhouse in artificial intelligence and quantum technologies. The continued advances in these dual-use technologies may be leveraged for military applications pursuant to a national strategy of military-civil fusion. At this point, the trajectory of technological developments is uncertain, and considerable challenges remain to the actualization of deeper fusion of China’s defense and commercial sectors. However, if successful, China’s ambitions to lead in these strategic technologies could enable it to pioneer new paradigms of military power. |
| Keywords: | Social and Behavioral Sciences, China, defense innovation, artificial intelligence, AI, quantum technology, dual use, military-civil fusion |
| Date: | 2018–05–30 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:globco:qt66n8s5br&r=all |
| By: | Deller, Steven (University of Wisconsin-Madison); Whitacre, Brian (Oklahoma State University) |
| Abstract: | Using data for remote rural U.S. counties (n=887) we estimate the impact of broadband Internet access on median housing value. We account for spatial dependencies in the joint determination of investments in broadband access and housing values using a modified version of the feasible generalized spatial two stage least squares (FGS2SLS) estimator suggested by Kelejian and Prucha (1998). The data support the central hypothesis that remote rural housing values are positively impacted by higher access. Our estimates suggest that there are declining returns to speed availability, with access to at least some type of Internet being more valuable than having only a very high-speed connection accessible. |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:wisagr:591&r=all |
| By: | Pierpaolo Benigno (LUISS and EIEF) |
| Abstract: | Can currency competition affect central banks' control of interest rates and prices? Yes, it can. In a two-currency world, the growth rate of the cryptocurrency sets an upper bound on the nominal interest rate and the attainable inflation rate, if the government currency is to retain its role as medium of exchange. In a world of multiple competing currencies issued by profit-maximizing agents, the nominal interest rate and inflation are both determined by structural factors, and thus not subject to manipulation, a result hailed by the proponents of currency competition. The article also proposes some fixes for the classical problem of indeterminacy of exchange rates. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:eie:wpaper:1905&r=all |
| By: | Collier, Ruth B; Dubal, V.B.; Carter, Christopher |
| Abstract: | Since 2012, the platform economy has received much academic, popular, and regulatory attention, reflecting its extraordinary rate of growth. This paper provides a conceptual and theoretical overview of rapidly growing labor platforms, focusing on how they represent both continuity and change in the world of work and its regulation. We first lay out the logic of different types of labor platforms and situate them within the decline of labor protections and the rise of intermediated employment relations since the 1970s. We then focus on one type of labor platform—the ondemand platform—and analyze the new questions and problems for workers and the political problem of labor regulation. To examine the politics of regulating labor on these platforms, we turn to Uber, which is the easiest case for labor regulation due to its high degree of control over work conditions. Because Uber drivers are atomized and ineffective at organizing collectively, their issues are most often represented by surrogate actors—including plaintiffs’ attorneys, alt labor groups, unions, and even Uber itself—whose own interests shape the nature of their advocacy for drivers. The result of this type of politics, dominated by concentrated interests and surrogate actors, has been a permissive approach by regulators in both legislative and judicial venues. If labor regulation has not occurred in this “easy†case, it is unlikely to occur for gig work on other labor platforms. |
| Keywords: | Social and Behavioral Sciences, labor, platforms, gig work, regulate |
| Date: | 2017–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:indrel:qt4c8862zj&r=all |
| By: | Makarov, Igor; Schoar, Antoinette |
| JEL: | F3 G3 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:100410&r=all |
| By: | Michael Koch (University of Bayreuth); Ilya Manuylov (Department of Economics and Business Economics, Aarhus University, Denmark); Marcel Smolka (Department of Economics and Business Economics, Aarhus University, Denmark) |
| Abstract: | We study the implications of robot adoption at the level of individual firms using a rich panel data-set of Spanish manufacturing firms over a 27-year period (1990-2016). We focus on three central questions: (1) Which firms adopt robots? (2) What are the labor market effects of robot adoption at the firm level? (3) How does firm heterogeneity in robot adoption affect the industry equilibrium? To address these questions, we look at our data through the lens of recent attempts in the literature to formalize the implications of robot technology. As for the first question, we establish robust evidence that ex-ante larger and more productive firms are more likely to adopt robots, while ex-ante more skill-intensive firms are less likely to do so. As for the second question, we find that robot adoption generates substantial output gains in the vicinity of 20-25% within four years, reduces the labor cost share by 5-7%-points, and leads to net job creation at a rate of 10%. These results are robust to controlling for non-random selection into robot adoption through a difference-in-differences approach combined with a propensity score reweighting estimator. Finally, we reveal substantial job losses in firms that do not adopt robots, and a productivity-enhancing reallocation of labor across firms, away from non-adopters, and toward adopters. |
| Keywords: | Automation, Robots, Firms, Productivity, Technology |
| JEL: | D22 F14 J24 O14 |
| Date: | 2019–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2019-05&r=all |
| By: | Matkin, Gary W |
| Keywords: | Education |
| Date: | 2018–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:cshedu:qt44r5w9f0&r=all |
| By: | OECD |
| Abstract: | In recent years there has been a large number of attempts to estimate the number of platform workers. Lacking a common definition of platform workers, however, these estimates are not comparable across countries and over time. This paper starts to address these issues, by explaining the concept of platform work, reviewing previous attempts to measure platform workers by private agencies and official statistical agencies and examining how different survey questions can affect the understanding of the respondents. The paper also highlights innovative uses of data that provide greater insights into platform workers and concluded with recommendations on how to measure platform workers in the future. |
| Date: | 2019–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaab:282-en&r=all |
| By: | Bircan, Cagatay; de Haas, Ralph |
| Abstract: | We exploit historically-determined variation in local credit markets to identify the impact of bank lending on firm innovation across Russia. We find that deeper credit markets increase firms' use of bank credit, their adoption of new products and technologies, and productivity growth. This relationship is more pronounced in industries further from the technological frontier; more exposed to import competition; and that export more. These impacts are also stronger for firms near historical R&D centers or railways, and in regions with supportive institutions. Consistent with these results, credit markets contribute to economic growth in such regions. |
| Keywords: | credit constraints; Firm innovation; institutions; Russia; Technological change |
| JEL: | D22 G21 O12 O31 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13663&r=all |
| By: | Stiroh, Kevin J. (Federal Reserve Bank of New York) |
| Abstract: | Remarks at SIPA’s Cyber Risk to Financial Stability: State-of-the-Field Conference 2019, Federal Reserve Bank of New York, New York City. |
| Keywords: | cybersecurity; resiliency; controls; risk; governance; technology |
| Date: | 2019–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsp:317&r=all |
| By: | Elisa Salvador (ESSCA School of Management - ESSCA School of Management) |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02078835&r=all |
| By: | Uusiautti, Satu; Määttä, Kaarina |
| Abstract: | The ways we represent our relationships, notice our partners, and let the social media interfere in our romantic relationships have aroused researchers’ interest. In this research, the purpose was to analyze, how people who use social media actively perceive the connection between social media and romantic relationships. The research questions set for this study were: (1) What are the rules of self-disclosure that support romantic relationships in social media?; (2) What kinds of benefits do social media provide for romantic relationships?; and (3) What kinds of threats or disadvantages do social media provide for romantic relationships? This was a qualitative research in which the research participants (N=25) were approached with an online questionnaire that included open-ended questions. The answers were analyzed with the qualitative content analyzing method. The findings showed that the research participants could name some principles of self-disclosure regarding their romantic relationships in social media and certain benefits as well as harms and threats of social media for a romantic relationship. The findings were further discussed in the light of the elements of love as emotions, love as actions, and love as skills and knowledge that here could be interpreted as “the media literacy of romantic relationships”. |
| Keywords: | social media, romantic relationship, online behavior, love |
| JEL: | Z00 |
| Date: | 2017–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82684&r=all |