nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2020‒02‒17
twenty-two papers chosen by

  1. Adopting mobile money: Evidence from an experiment in rural Africa By Catia Batista; Pedro C. Vicente
  2. Macro and Micro Implications of the Introduction of Central Bank Digital Currencies: An Overview By Gérard Mondello; Elena Sinelnikova; Pavel Trunin
  3. The economic forces driving fintech adoption across countries By Jon Frost
  4. Digital Platforms and the Demand for International Tourism Services By Lopez Cordova,Jose Ernesto
  5. Artificial Intelligence Platforms – A New Research Agenda for Digital Platform Economy By Mucha, Tomasz; Seppälä, Timo
  6. Competition and privacy in online markets: Evidence from the mobile app industry By Kesler, Reinhold; Kummer, Michael E.; Schulte, Patrick
  7. Stages of Development of Payment Systems : Leapfrogging across Countries and MENA's Place in the World By Gevaudan,Clement; Lederman,Daniel
  8. Going Digital integrated policy framework By OECD
  9. Initial Crypto-asset Offerings (ICOs), tokenization and corporate governance By Stéphane Blémus; Dominique Guegan
  10. Music industry intermediation in the digital era and the resilience of the Majors’ oligopoly: the role of transactional capability By Rémy Guichardaz; Laurent Bach; Julien Penin
  11. How Broadband Internet Affects Labor Market Matching By Bhuller, Manudeep; Kostol, Andreas Ravndal; Vigtel, Trond Christian
  12. Central Bank Digital Currency: Central Banking For All? By Jesœs Fern‡ndez-Villaverde; Daniel R. Sanches; Linda Schilling; Harald Uhlig
  13. Money for Nothin’ – Digitalization and Fluid Tax Bases By Blix, Mårten
  14. Crypto assets: the role of ICO tokens within a well-diversified portfolio By Saman Adhami; Dominique Guegan
  15. Just Released: More Credit Cards, Higher Limits, and . . . an Uptick in Delinquency By Joelle Scally; Andrew F. Haughwout; Donghoon Lee; Wilbert Van der Klaauw
  16. Artificial Intelligence, Data, Ethics: An Holistic Approach for Risks and Regulation By Alexis Bogroff; Dominique Guegan
  17. Foreign Direct Investment, Information Technology and Economic Growth Dynamics in Sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  18. Venture Capital Contracts By Ewens, Michael; Gorbenko, Alexander; Korteweg, Arthur
  19. Reframing the Debate about Payday Lending By Donald P. Morgan; Michael R. Strain; Robert DeYoung; Ronald J. Mann
  20. Technology and Big Data Are Changing Economics: Mining Text to Track Methods By Janet Currie; Henrik Kleven; Esmée Zwiers
  21. Terrorism and social media: global evidence By Simplice A. Asongu; Stella-Maris I. Orim; Rexon T. Nting
  22. Does Social Media Promote Democracy? Some Empirical Evidence By Chandan Kumar Jha; Oasis Kodila-Tedika

  1. By: Catia Batista; Pedro C. Vicente
    Abstract: Who uses mobile money? And what is mobile money used for? This paper describes the mobile money adoption patterns following the experimental introduction of mobile money services for the first time in rural areas of Southern Mozambique. In particular, we examine the individual characteristics of early and late adopters, as well as their mobile money usage patterns. For this purpose, we use a combination of administrative and household survey data to characterize the adoption of mobile money services in the three years following their initial introduction. We find that a large proportion of the individuals who were offered mobile money services adopted this technology. These users of mobile money (and early adopters in particular) are more educated than non-users, and they also are more likely to already hold a bank account. Positive-self-selection into mobile money usage raises the question of whether mobile money is an effective tool for financial inclusion.
    Keywords: Fintech, Mobile money, Technology adoption, Self-selection, Financial inclusion, Financial deepening, Mozambique, Africa.
    Date: 2020
  2. By: Gérard Mondello (Université Côte d'Azur, France; GREDEG CNRS); Elena Sinelnikova (Center for the Study of Central Banks, Institute for Applied Economic Studies, RANEPA); Pavel Trunin (Macroeconomics and Finance Division, Division Head Gaidar Institute for Economic Policy, Moscow)
    Abstract: After the emergence and widespread of cryptocurrencies central banks are studying how their own digital currencies may help and favor the monetary policy implementation. There are many challenges to this process both in legal and economic (financial, monetary) areas. The paper studies the potential movement from a two-tier banking system (central bank and banks) to a one-tier banking system in case of CBDCs emission, including the issues of competition and commercial banking profitability. More specific question is the change of the transmission of monetary policy with CBDC emission.
    Keywords: CBDC, digital currency, cryptocurrency, monetary policy
    JEL: B53 E42
    Date: 2020–02
  3. By: Jon Frost
    Abstract: Fintech is being adopted across markets worldwide - but not evenly. Why not? This paper reviews the evidence. In some economies, especially in the developing world, adoption is being driven by an unmet demand for financial services. Fintech promises to deliver greater financial inclusion. In other economies, adoption can be related to the high cost of traditional finance, a supportive regulatory environment, and other macroeconomic factors. Finally, demographics play an important role, as younger cohorts are more likely to trust and adopt fintech services. Where fintech helps to make the financial system more inclusive and efficient, this could benefit economic growth. Yet the market failures traditionally present in finance remain relevant, and may manifest themselves in new guises.
    Keywords: fintech, digital innovation, financial inclusion, financial regulation
    JEL: E51 G23 O33
    Date: 2020–02
  4. By: Lopez Cordova,Jose Ernesto
    Abstract: Tourism is an important source of foreign exchange and employment across developing economies. A scant literature has explored the relationship between tourism and the advent of the internet. This paper contributes to the tourism-trade literature and studies the empirical relationship between international tourism and the adoption of digital technologies that facilitate search about tourism opportunities across countries. It links foreign visits with the spread of the use of the internet in sending countries and the level of development of business-to-consumer digital tools in host countries. The paper estimates a well-specified gravity model of tourist arrivals between country pairs with panel data. The results indicate that frictions affecting bilateral tourism flows have been attenuated by the advent of digital tools. The absolute value of the effects of bilateral geographic distance, language differences, and border-contiguity seem to be reduced by the use of the internet by potential tourists and the business sector in host countries. The results are robust to alternative proxies for internet use for tourism search proxied by data from Google trends. The paper also presents simulations of the potential impacts of advances in the adoption of digital tools over time, linking the adoption process to mechanisms of technology adoption that are commonplace in the literature.
    Date: 2020–02–13
  5. By: Mucha, Tomasz; Seppälä, Timo
    Abstract: Abstract Three out of nine of S&P500 digital platform companies stand out as building own artificial intelligence (AI) platforms. There is overwhelming empirical evidence of AI technologies are being central to running a digital platform business. However, the current research agenda is not directing researchers to study AI technologies in the context of digital platforms. We have divided the proposed AI platforms research agenda as follows: The first set of questions we propose relates to an overall conceptualization of AI platforms. Thereafter, we recognize specific aspects of AI platforms, which need to be investigated in detail to gain understanding that is more complete. The second set of questions we propose relates to understanding the dynamics between AI platforms and the broader socio-economic context. This topic might be particularly relevant to economies of countries without indigenous AI platforms. Our paper builds on the proposition that AI is a general-purpose technology, which by itself carries properties of a digital platform.
    Keywords: Platforms, Digital Platform Economy, Artificial Intelligence, AI platforms, Research agenda
    JEL: M1 M21 O3 O33
    Date: 2020–02–06
  6. By: Kesler, Reinhold; Kummer, Michael E.; Schulte, Patrick
    Abstract: Policy makers are increasingly concerned about the combination of market power and massive data collection in digital markets. This concern is fueled by the theoretical prediction that more market power causes firms to collect ever more data from their users. We investigate the relationship between market power and data collection empirically. We analyze data about more than 1.5 million mobile applications in several thousand submarkets of Google's Play Store. We observe these data for over two years and combine information on an app's data collection with information about its competitive environment. Our analysis highlights a robust positive relationship between market power and data collection. We find that more data are being collected in concentrated markets, and apps with higher market shares collect more data. This pattern robustly emerges across a series of cross-sectional and panel regressions as well as a series of specifications that exploit exogenous variation.
    Keywords: Competition,Market Power,Privacy,User Data,Apps
    JEL: L17 D4 D85 D29
    Date: 2019
  7. By: Gevaudan,Clement; Lederman,Daniel
    Abstract: This paper studies the relationship between the level of economic development and the incidence of three forms of payments across countries, namely the incidence of bank accounts, digital payments, and mobile money accounts among the adult populations across countries. It presents simple statistical tests of leapfrogging, the phenomenon by which poor countries surpass rich countries in the provision of payments mechanisms. It contributes to a broader and long-standing literature on stages of development, as well as to the literature on financial development and access to finance. The findings suggest that there is evidence of"absolute"and"relative"leapfrogging, with both terms defined in the paper. In addition, the Middle East and North Africa region, on average, suffers from a notable underperformance gap across all observed stages of payment-systems development. This finding suggests that the region suffers from structural impediments to the development of its financial and banking systems that go well beyond the adoption of digital-technology tools.
    Keywords: ICT Economics,Economic Growth,Industrial Economics,Economic Theory&Research,Financial Sector Policy,Telecommunications Infrastructure,Financial Structures
    Date: 2020–01–07
  8. By: OECD
    Abstract: Digital transformation has widespread and complex effects across the economy and society. It impacts many policy domains and makes trade-offs between public policy objectives more difficult to navigate. The Going Digital Integrated Policy Framework helps governments and stakeholders to develop an integrated approach to policy making in the digital age and to shape policies for an inclusive digital future. This report outlines the framework’s seven interrelated policy dimensions: 1) access to communications infrastructures, services and data; 2) effective use of digital technologies and data; 3) digital and data-driven innovation; 4) good jobs for all; 5) social prosperity and inclusion; 6) trust in the digital age; and 7) market openness in digital business environments. The report also highlights transversal policy issues (e.g. skills, digital government, SMEs and data) that cut across several policy dimensions. Finally, this report provides guidance on putting the framework into practice.
    Date: 2020–02–14
  9. By: Stéphane Blémus (UP1 - Université Panthéon-Sorbonne, Labex ReFi - UP1 - Université Panthéon-Sorbonne, Kalexius law firm, ChainTech); Dominique Guegan (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Panthéon-Sorbonne, Labex ReFi - UP1 - Université Panthéon-Sorbonne, University of Ca’ Foscari [Venice, Italy], IPAG Business School)
    Abstract: This paper discusses the potential impacts of the so-called "initial coin offerings", and of several developments based on distributed ledger technology ("DLT"), on corporate governance. While many academic papers focus mainly on the legal qualification of DLT and crypto-assets, and most notably in relation to the potential definition of the latter as securities/financial instruments, the authors analyze some of the use cases based on DLT technology and their potential for significant changes of the corporate governance analyses. This article studies the consequences due to the emergence of new kinds of firm stakeholders, i.e. the crypto-assets holders, on the governance of small and medium-sized enterprises ("SMEs") as well as of publicly traded companies. Since early 2016, a new way of raising funds has rapidly emerged as a major issue for FinTech founders and financial regulators. Frequently referred to as initial coin offerings, Initial Token Offerings ("ITO"), Token Generation Events ("TGE") or simply "token sales", we use in our paper the terminology Initial Crypto-asset Offerings ("ICO"), as it describes more effectively than "initial coin offerings" the vast diversity of assets that could be created and which goes far beyond the payment instrument issue.
    Keywords: ICO,Crypto-asset,Blockchain,Governance,Tokens
    Date: 2019–02
  10. By: Rémy Guichardaz (BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique); Laurent Bach (BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique); Julien Penin (BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The digital revolution has significantly impacted the music industry by lowering barriers to entry. This change is usually depicted as endangering the big incumbent firms, the so-called ‘Majors' (Universal, Sony, and Warner). Yet, market indicators show that the majors' leadership has not declined. In part thanks to the application of a 360° business model made possible by digitization, they have been able to sustain their position. However, there is still a lack of theoretical account as well as empirical evidence for understanding how this model has been implemented by the Majors. This paper uses the concept of transactional capabilities in order to explain this switch towards 360° business model : majors have relied on a new type of competences, more oriented towards the completion of multiple transactions in parallel with heterogeneous actors. We illustrate this point with the case study of the French arm of Sony Music Entertainment.
    Keywords: dynamic capabilities,business model,transactional capability,Music industry,disintermediation
    Date: 2019–09
  11. By: Bhuller, Manudeep (University of Oslo); Kostol, Andreas Ravndal (Arizona State University); Vigtel, Trond Christian (University of Oslo)
    Abstract: How the internet affects job matching is not well understood due to a lack of data on job vacancies and quasi-experimental variation in internet use. This paper helps fill this gap using plausibly exogenous roll-out of broadband infrastructure in Norway, and comprehensive data on recruiters, vacancies and job seekers. We document that broadband expansions increased online vacancy-postings and lowered the average duration of a vacancy and the share of establishments with unfilled vacancies. These changes led to higher job-finding rates and starting wages and more stable employment relationships after an unemployment-spell. Consequently, our calculations suggest that the steady-state unemployment rate fell by as much as one-fifth.
    Keywords: unemployment, information, job search, matching
    JEL: D83 J63 J64 L86
    Date: 2020–01
  12. By: Jesœs Fern‡ndez-Villaverde (University of Pennsylvania - Department of Economics); Daniel R. Sanches (Federal Reserve Banks - Federal Reserve Bank of Philadelphia); Linda Schilling (Ecole Polytechnique- CREST); Harald Uhlig (University of Chicago - Department of Economics)
    Abstract: The introduction of a central bank digital currency (CBDC) allows the central bank to engage in large-scale intermediation by competing with private financial intermediaries for deposits. Yet, since a central bank is not an investment expert, it cannot invest in long-term projects itself, but relies on investment banks to do so. We derive an equivalence result that shows that absent a banking panic, the set of allocations achieved with private financial intermediation will also be achieved with a CBDC. During a panic, however, we show that the rigidity of the central bankÕs contract with the investment banks has the capacity to deter runs. Thus, the central bank is more stable than the commercial banking sector. Depositors internalize this feature ex-ante, and the central bank arises as a deposit monopolist, attracting all deposits away from the commercial banking sector. This monopoly might endangered maturity transformation.
    Keywords: central bank digital currency, central banking, intermediation, maturity transformation, bank runs, lender of last resort
    JEL: E58 G21
    Date: 2020
  13. By: Blix, Mårten (Research Institute of Industrial Economics (IFN))
    Abstract: Technology and digitalization are transforming economic activity, but tax policies are lagging behind. The development also encompasses a broad shift in value-creation, with less emphasis on physical production and more on soft knowledge/intangibles, notably copyrights, firm-specific processes, data and software. We discuss what these changes imply, and we outline the economic factors of scale- and network effects that magnify existing economic trends. A key concern is that the distortionary effects of taxation will become more severe and that tax bases will erode. As factors of production are becoming more fluid and mobile, multinational corporations have been able to shift their profits to low-tax jurisdictions, so called base erosion profit shifting (BEPS). To counter this possibility, a number of governments in 2019 began to unilaterally impose taxes aimed specifically at digital firms. Unless a broad agreement can be reached within the nexus of the more than 130 countries in the OECD/BEPS framework, the existing multinational rule-based order for corporate tax could begin to crumble. On the domestic front, the tax challenges for labour income are, if possible, even more extensive. Although the labour market changes are slower, their key role in public finances imply that even minor reductions result in significant funding challenges. To ensure we get money for somethin’, we conclude that a new comprehensive tax reform is urgent.​
    Keywords: Digital tax; OECD/BEPS; Digitalization; Taxation
    JEL: H21 H25 H26 H27 O33
    Date: 2020–02–05
  14. By: Saman Adhami (VGSF - Vienna Graduate School of Finance); Dominique Guegan (UP1 - Université Panthéon-Sorbonne, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, University of Ca’ Foscari [Venice, Italy], UEH - University of Economics Ho Chi Minh City)
    Abstract: This paper reexamines the discussion on blockchain technology, crypto assets and ICOs, providing also evidence that in crypto markets there are currently two classes of assets, namely standalone cryptocurrencies (or 'coins') and tokens, which result from an ICO and are intrinsically linked to the performance of the issuing company or venture. While the former have been arguments of various empirical studies regarding their price dynamics and their effect on the variance of a well-diversified portfolio, no such study has been done to analyze listed tokens, which in our sample are over 700 and with a backing of about $17.3Bn from their respective ICOs. Therefore, investors interested in optimizing their portfolios should first assess the diversifier, hedge or safe haven role of tokens vis-à-vis traditional assets, on top of 'coins', in order to sensibly use this new asset class. After constructing various indices to represent both the token asset class as a whole and its sub-classes, we model dynamic conditional correlations among all the assets in our sample to obtain time-varying correlations for each token-asset pair. We find that tokens are effective diversifiers but not a hedge or a safe haven asset. We evidence that tokens retain important systematic differences with the two other asset classes to which they are most generally compared to, namely 'coins' and equities.
    Keywords: Hedge,Safe Haven,DCC-MGARCH,Initial Coin Offering,Cryptocurrency
    Date: 2019–09
  15. By: Joelle Scally; Andrew F. Haughwout; Donghoon Lee; Wilbert Van der Klaauw
    Abstract: Today the New York Fed?s Center for Microeconomic Data released its Quarterly Report on Household Debt and Credit for the second quarter of 2017. Overall debt balances increased in the period, continuing their moderate growth since 2013. Nearly all types of balances grew, with mortgages and auto loans rising by $64 billion and $23 billion, respectively. Credit card balances increased by $20 billion, recovering from the typical seasonal first-quarter decline. The overall balance surpassed its previous peak in the first quarter. We wrote here about how the new peak poses little concern in and of itself?after all, the debt?s composition and characteristics are now very different than in 2008. There are, however, aspects of the household balance sheet that warrant close monitoring. For example, last year, we pointed out that there had been a moderate rise in the number of credit cards issued to nonprime borrowers. Separately, last quarter we noted an uptick in delinquency transitions for credit card balances, and we observed another climb in this quarter. So here, we further investigate how credit card balances, accounts, and delinquencies have evolved over the past year.
    Keywords: household finance; credit cards; consumer credit panel; CCP; credit
    JEL: D1
  16. By: Alexis Bogroff (UP1 - Université Panthéon-Sorbonne); Dominique Guegan (UP1 - Université Panthéon-Sorbonne, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, Labex ReFi - UP1 - Université Panthéon-Sorbonne, University of Ca’ Foscari [Venice, Italy])
    Abstract: An extensive list of risks relative to big data frameworks and their use through models of artificial intelligence is provided along with measurements and implementable solutions. Bias, interpretability and ethics are studied in depth, with several interpretations from the point of view of developers, companies and regulators. Reflexions suggest that fragmented frameworks increase the risks of models misspecification, opacity and bias in the result; Domain experts and statisticians need to be involved in the whole process as the business objective must drive each decision from the data extraction step to the final activatable prediction. We propose an holistic and original approach to take into account the risks encountered all along the implementation of systems using artificial intelligence from the choice of the data and the selection of the algorithm, to the decision making.
    Keywords: Artificial Intelligence,Bias,Big Data,Ethics,Governance,Interpretability,Regulation,Risk
    Date: 2019–06
  17. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: The research assesses how information and communication technology (ICT) modulates the effect of foreign direct investment (FDI) on economic growth dynamics in 25 countries in Sub-Saharan Africa for the period 1980-2014. The employed economic growth dynamics areGross Domestic Product (GDP) growth, real GDP and GDP per capita while ICT is measured by mobile phone penetration and internet penetration. The empirical evidence is based on the Generalised Method of Moments. The study finds that both internet penetration and mobile phone penetration overwhelmingly modulate FDI to induce overall positive net effects on all three economic growth dynamics. Moreover, the positive net effects are consistently more apparent in internet-centric regressions compared to “mobile phone†-oriented specifications. In the light of negative interactive effects, net effects are decomposed to provide thresholds at which ICT policy variables should be complemented with other policy initiatives in order to engender favorable outcomes on economic growth dynamics. Practical and theoretical implications are discussed.
    Keywords: Economic Output; Foreign Investment; Information Technology; Sub-Saharan Africa
    JEL: E23 F21 F30 L96 O55
    Date: 2019–01
  18. By: Ewens, Michael (California Institute of Technology); Gorbenko, Alexander; Korteweg, Arthur
    Abstract: We estimate the impact of venture capital (VC) contract terms on startup outcomes and the split of value between the entrepreneur and investor, accounting for endogenous selection via a novel dynamic search and matching model. The estimation uses a new, large data set of first financing rounds of startup companies. Consistent with efficient contracting theories, there is an optimal equity split between agents that maximizes the probability of success. However, VCs use their bargaining power to receive more investor-friendly terms compared to the contract that maximizes startup values. Better VCs still benefit the startup and the entrepreneur, due to their positive value creation. Counterfactual exercises show that eliminating certain contract terms benefits entrepreneurs and enables low-quality entrepreneurs to finance their startups more quickly, increasing the number of deals in the market. Lowering search frictions shifts the bargaining power to VCs and benefits them at the expense of entrepreneurs. The results show that selection of agents into deals is a first-order factor to take into account in studies of contracting.
    Date: 2019–07–17
  19. By: Donald P. Morgan; Michael R. Strain (American Enterprise Institute); Robert DeYoung; Ronald J. Mann (University of Michigan; Law School; Columbia University)
    Abstract: Except for the ten to twelve million people who use them every year, just about everybody hates payday loans. Their detractors include many law professors, consumer advocates, members of the clergy, journalists, policymakers, and even the President! But is all the enmity justified? We show that many elements of the payday lending critique?their ?unconscionable? and ?spiraling? fees and their ?targeting? of minorities?don?t hold up under scrutiny and the weight of evidence. After dispensing with those wrong reasons to object to payday lenders, we focus on a possible right reason: the tendency for some borrowers to roll over loans repeatedly. The key question here is whether the borrowers prone to rollovers are systematically overoptimistic about how quickly they will repay their loan. After reviewing the limited and mixed evidence on that point, we conclude that more research on the causes and consequences of rollovers should come before any wholesale reforms of payday credit.
    Keywords: reform; roll overs; payday credit
    JEL: D1
  20. By: Janet Currie; Henrik Kleven; Esmée Zwiers
    Abstract: The last 40 years have seen huge innovations in computing technology and data availability. Data derived from millions of administrative records or by using (as we do) new methods of data generation such as text mining are now common. New data often requires new methods, which in turn can inspire new data collection. If history is any guide, some methods will stick and others will prove to be a flash in the pan. However, the larger trends towards demanding greater credibility and transparency from researchers in applied economics and a “collage” approach to assembling evidence will likely continue.
    JEL: A0 B0 C0 H0 I0 J0 L0
    Date: 2020–01
  21. By: Simplice A. Asongu (Yaoundé/Cameroon); Stella-Maris I. Orim (Coventry University, UK); Rexon T. Nting (University of Wales, London, UK)
    Abstract: The study assesses the relationship between terrorism and social media from a cross section of 148 countries with data for the year 2012. The empirical evidence is based on Ordinary Least Squares, Negative Binomial and Quantile regressions. The main finding is that there is a positive relationship between social media in terms of Facebook penetration and terrorism. The positive relationship is driven by below-median quantiles of terrorism. In other words, countries in which existing levels of terrorism are low are more significantly associated with a positive Facebook-terrorism nexus. The established positive relationship is confirmed from other externalities of terrorism: terrorism fatalities, terrorism incidents, terrorism injuries and terrorism-related property damages. The terrorism externalities are constituents of the composite dependent variable.
    Keywords: Social Media; Terrorism
    JEL: D83 O30 D74
    Date: 2019–01
  22. By: Chandan Kumar Jha (New York, USA); Oasis Kodila-Tedika (Kinshasa, The Democratic Republic of Congo)
    Abstract: This study explores the relationship between social media and democracy in a cross- section of over 125 countries around the world. We find the evidence of a strong, positive correlation between Facebook penetration (a proxy for social media) and democracy. We further show that the correlation between social media and democracy is stronger for low-income countries than high-income countries. Our lowest point estimates indicate that a one-standard deviation (about 18 percentage point) increase in Facebook penetration is associated with about 8-point (on a scale of 0–100) increase for the world sample and over 11 points improvement for low-income countries.
    Keywords: Democracy; Information; Facebook; Internet; Social Media
    JEL: D72 D83 O1
    Date: 2019–01

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