nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2021‒07‒26
thirty-six papers chosen by

  1. Early “Frictions” in the Transition towards Cashless Payments By Batiz-Lazo, Bernardo; Buckley, Tom
  2. L'impatto della pandemia sull'uso degli strumenti di pagamento in Italia By Ardizzi Guerino; Alessandro Gambini; Andrea Nobili; Emanuele Pimpini; Giorgia Rocco
  3. Explaining Caste-based Digital Divide in India By R Vaidehi; A Bheemeshwar Reddy; Sudatta Banerjee
  4. Data Sharing Markets By Mohammad Rasouli; Michael I. Jordan
  5. Cross-relationships between microfinance and the banking sector: continuities and discontinuities in credit provision. By Amélie Artis; Kouassi N'Goran
  6. Valuing cryptocurrencies: Three easy pieces By Burda, Michael C.
  7. Emerging Innovation Risk Management in Financial Institutions of United States By Abu Karsh, Sharif M.
  8. The rise of the sharing economy and its relationship with sustainable development. A critical literature review By Martina Nannelli; Stefania Oliva
  9. On Reward Sharing in Blockchain Mining Pools By Burak Can; Jens Leth Hougaard; Mohsen Pourpouneh
  10. Factors determining maximum energy consumption of Bitcoin miners By Jesus M. Gonzalez-Barahona
  11. Fundamentals vs. policies: can the US dollar’s dominance in global trade be dented? By Georgios Georgiadis; Helena Le Mezo; Arnaud Mehl; Cedric Tille
  12. Growing like Google: Endogenous Growth with Global Network Externalities By Cordoba, Juan Carlos; He, Sicheng
  13. The Role of "Live" in Livestreaming Markets: Evidence Using Orthogonal Random Forest By Ziwei Cong; Jia Liu; Puneet Manchanda
  14. Bitcoin, Currencies, and Bubbles By Nassim Nicholas Taleb
  15. Crowdsourcing Artificial Intelligence in Africa: Findings from a Machine Learning Contest By Naudé, Wim; Bray, Amy; Lee, Celina
  16. Digital technology and productivity of informal enterprises: Empirical evidence from Nigeria By Michael Danquah; Solomon Owusu
  17. “The Chemistry of MSME and Digital Platforms” By syam, muhammad alvin arkananta
  18. The Role of Binance in Bitcoin Volatility Transmission By Carol Alexander; Daniel Heck; Andreas Kaeck
  19. Effectiveness of Artificial Intelligence in Stock Market Prediction based on Machine Learning By Sohrab Mokhtari; Kang K. Yen; Jin Liu
  20. Collective intelligence and the blockchain: Technology, communities and social experiments By Andrea Baronchelli
  21. Decent Work in Crowdwork: Gendered Takeaways from an Online Survey in the Philippines By Bayudan-Dacuycuy, Connie; Baje, Lora Kryz C.
  22. Emerging Tax Issues in the Digital Economy By Cuenca, Janet S.
  23. Does the Age at Which a Consumer Gets Their First Credit Matter? Credit Bureau Entry Age and First Credit Type Effects on Credit Score By Lucas Nathe
  24. Public Health, Technology, and Human Rights: Lessons from Digital Contact Tracing By Maria Carnovale; Khahlil Louisy
  25. Playlisting Favorites: Measuring Platform Bias in the Music Industry By Luis Aguiar; Joel Waldfogel; Sarah B. Waldfogel
  26. Going Karura: colliding subjectivities and labour struggle in Nairobi’s gig economy By Iazzolino, Gianluca
  27. Inside the black box: tools for understanding cash circulation By Luca Baldo; Elisa Bonifacio; Marco Brandi; Michelina Lo Russo; Gianluca Maddaloni; Andrea Nobili; Giorgia Rocco; Gabriele Sene; Massimo Valentini
  28. Uncovering Retail Trading in Bitcoin: The Impact of COVID-19 Stimulus Checks By Anantha Divakaruni; Peter Zimmerman
  29. Machine Learning for Financial Forecasting, Planning and Analysis: Recent Developments and Pitfalls By Helmut Wasserbacher; Martin Spindler
  30. Innovation Collectives in Response to the COVID-19 Crisis: How Digital Technologies Facilitate the Innovation Process of Ventilator Development By Koppe, Timo; Eckert, Bastian AE
  31. People’s Republic of China–Hong Kong Special Administrative Region: Financial Sector Assessment Program-Technical Note-Implications of Fintech for the Regulation and Supervision of the Financial Sector By International Monetary Fund
  32. Epidemic Exposure, Fintech Adoption, and the Digital Divide By Orkun Saka; Barry Eichengreen; Cevat Giray Aksoy
  33. Strategies to manage the risks faced by consumers in developing e-commerce By Kiran Javaria; Omar Masood; Fernando Garcia
  34. Microfinance: building a new financial institution? By Amélie Artis; Kouassi N’goran
  35. Sustainable finance, current and future implications for banks and monetary policy: assessing COVID impacts By Ojo/Roedl, Marianne
  36. Application of deep reinforcement learning for Indian stock trading automation By Supriya Bajpai

  1. By: Batiz-Lazo, Bernardo; Buckley, Tom
    Abstract: In this article we describe the trials and tribulations in the early stages to introduce cashless retail payments in the USA. We compare efforts by financial service firms and retailers. We then document the ephemeral life of one of these innovations, colloquially known as “Hinky Dinky”. We conclude with a brief reflection on the lessons these historical developments offer to the future of digital payments.
    Keywords: cashless, payments, innovation, USA, Hinky Dinky
    JEL: E42 L81 N2 N8
    Date: 2021–07
  2. By: Ardizzi Guerino (Bank of Italy); Alessandro Gambini (Bank of Italy); Andrea Nobili (Bank of Italy); Emanuele Pimpini (Bank of Italy); Giorgia Rocco (Bank of Italy)
    Abstract: This paper evaluates the impact of the COVID-19 pandemic on the use of retail payment instruments in Italy. After a brief overview of the trends prevailing in Italy before the spread of the pandemic, we analyse the dynamics of the main indicators on payment habits during the two waves of infection that have affected the country. We estimate the effects on the payment industry using different measures of the intensity of the pandemic in order to capture the impact of fears of contagion on the behaviour of households and businesses and the impact of the measures taken to contain the infection, which imposed constraints on social mobility and productive and commercial activities. The estimates show that the pandemic has increased the use of cards compared with cash at the physical point of sale and has encouraged transactions through more innovative payment technologies that allow physical distancing, such as purchases with contactless cards, those on e-commerce sites, and those made by bank transfer. Moreover, the analysis at the regional level suggests that the increase in more innovative electronic payments was more marked in Central and Southern Italy, areas in which, before the pandemic, the diffusion of electronic means of payment was more contained in comparison with the North of the country. The frequency of online purchases, on the other hand, has grown more in the North, which has a more evolved digital ecosystem and has been more severely affected by health emergency and, therefore, by stricter restrictions.
    Keywords: Covid-19, cash, payment cards, other payment instruments
    JEL: E41 E42 G2 O3
    Date: 2021–07
  3. By: R Vaidehi; A Bheemeshwar Reddy; Sudatta Banerjee
    Abstract: With the increasing importance of information and communication technologies in access to basic services like education and health, the question of the digital divide based on caste assumes importance in India where large socioeconomic disparities persist between different caste groups. Studies on caste-based digital inequality are still scanty in India. Using nationally representative survey data, this paper analyzes the first-level digital divide (ownership of computer and access to the internet) and the second-level digital divide (individual's skill to use computer and the internet) between the disadvantaged caste group and the others. Further, this paper identifies the caste group-based differences in socioeconomic factors that contribute to the digital divide between these groups using a non-linear decomposition method. The results show that there exists a large first-level and second-level digital divide between the disadvantaged caste groups and others in India. The non-linear decomposition results indicate that the caste-based digital divide in India is rooted in historical socioeconomic deprivation of disadvantaged caste groups. More than half of the caste-based digital gap is attributable to differences in educational attainment and income between the disadvantaged caste groups and others. The findings of this study highlight the urgent need for addressing educational and income inequality between the different caste groups in India in order to bridge the digital divide.
    Date: 2021–06
  4. By: Mohammad Rasouli; Michael I. Jordan
    Abstract: With the growing use of distributed machine learning techniques, there is a growing need for data markets that allows agents to share data with each other. Nevertheless data has unique features that separates it from other commodities including replicability, cost of sharing, and ability to distort. We study a setup where each agent can be both buyer and seller of data. For this setup, we consider two cases: bilateral data exchange (trading data with data) and unilateral data exchange (trading data with money). We model bilateral sharing as a network formation game and show the existence of strongly stable outcome under the top agents property by allowing limited complementarity. We propose ordered match algorithm which can find the stable outcome in O(N^2) (N is the number of agents). For the unilateral sharing, under the assumption of additive cost structure, we construct competitive prices that can implement any social welfare maximizing outcome. Finally for this setup when agents have private information, we propose mixed-VCG mechanism which uses zero cost data distortion of data sharing with its isolated impact to achieve budget balance while truthfully implementing socially optimal outcomes to the exact level of budget imbalance of standard VCG mechanisms. Mixed-VCG uses data distortions as data money for this purpose. We further relax zero cost data distortion assumption by proposing distorted-mixed-VCG. We also extend our model and results to data sharing via incremental inquiries and differential privacy costs.
    Date: 2021–07
  5. By: Amélie Artis (IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UGA - Université Grenoble Alpes); Kouassi N'Goran (UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UPVD - Université de Perpignan Via Domitia - UPVM - Université Paul-Valéry - Montpellier 3 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Microfinance became popular thanks to the success of the Grameen Bank in Bangladesh and the Nobel Peace Prize. Today, this type of finance for the poor is considered a social innovation because of its values, which are in opposition to the dominant financial logic, but also because of its financing methodology, which aims to integrate people who do not have access to credit. In fact, over several decades of practice, microfinance has spread to other economic actors in the financial system (banking institutions, finance companies, fund managers, etc.). Thus, despite the contradictory credit granting logics of its two market actors, microfinance has been able to influence, through its practices, the way traditional finance operates. The mobilization of a recent literature review and a case study allows us to consider that the convergence of their interactions, in a formal political and regulatory context, explains the mission drifts of microfinance described in the literature. In this paper, we attempt to demonstrate the extent to which international donors and academics have fostered the process of microfinance-specific profit-sharing by showing that banks have adopted and adapted many of the practices of microfinance. We shed light on this point by using the case of microfinance in Côte d'Ivoire. This contribution also draws on the sociology of innovation, in particular the model of profit-sharing (Akrich, Callon, Latour, 1988) to describe the process of social innovation in which microfinance takes place. This theoretical model demonstrates that the diffusion of innovation is made possible by the success of its intrinsic qualities. The paper also describes, through the work of Bensebaa and Béji-Bécheur (2007), the process of institutionalization of norms coming from the solidarity economy sector to the conventional capitalist economy. Certain limits linked to the institutionalization process of this social innovation are presented in order to allow an understanding of the criticisms and limits of microfinance.
    Abstract: La microfinance s'est popularisée grâce au succès de la Grameen Bank au Bengladesh et au prix Nobel de la paix. Aujourd'hui cette finance à destination des pauvres est considérée comme une innovation sociale en raison de ses valeurs en opposition avec la logique financière dominante mais aussi du fait de sa méthodologie de financement visant à intégrer des personnes n'ayant pas accès au crédit. En effet, en plusieurs décennies de pratique, la microfinance s'est diffusée vers les autres acteurs économiques du système financier (établissements bancaires, sociétés financières, gestionnaires de fonds, etc.). Ainsi, malgré les logiques d'octroi de crédit contradictoires de ses deux acteurs du marché, la microfinance a su influencer, par ses pratiques, le mode de fonctionnement de la finance classique. La mobilisation d'une revue de littérature récente et d'une étude cas, nous permet de considérer que la convergence de leurs interactions, dans un contexte politique et réglementaire formel, explique les dérives de mission de la microfinance décrites dans la littérature. Dans le cadre de ce papier, nous tentons de démontrer dans quelle mesure les bailleurs internationaux et les académiciens ont favorisé le processus d'intéressement spécifique à la microfinance en montrant que les banques ont repris et adapté plusieurs des pratiques de la microfinance. Nous éclairons ce point en nous appuyant sur le cas de la microfinance en Côte d'Ivoire. Cette contribution mobilise, par ailleurs, la sociologie de l'innovation, en particulier le modèle de l'intéressement (Akrich, Callon, Latour, 1988) pour décrire le processus d'innovation sociale dans lequel s'inscrit la microfinance. Ce modèle théorique démontre que la diffusion de l'innovation est rendue possible grâce au succès de ses qualités intrinsèques. Le document décrit également, à travers les travaux de Bensebaa et Béji-Bécheur (2007) le processus d'institutionnalisation de normes venues du secteur de l'économie solidaire vers celui de l'économie conventionnelle capitaliste. Certaines limites liées au processus d'institutionnalisation de cette innovation sociale sont présentées en vue de permettre la compréhension des critiques et des limites de la microfinance.
    Keywords: Microfinance,Innovation sociale,Développement,Finance solidaire,Institutionnalisation
    Date: 2019–12–12
  6. By: Burda, Michael C.
    Abstract: This paper surveys the capacity of simple macroeconomic models - 'three easy pieces' - to account for persistent and positive valuations of privately issued assets based on the blockchain. Each of these three models - transactions demand for a means of payment, consumption-based capital asset pricing, and search and matching - highlights important aspects of digital payments. The mutual interference of these jointly produced features may impede widespread use of cryptocurrencies until technological innovations have been developed to separate them.
    JEL: C00
    Date: 2021
  7. By: Abu Karsh, Sharif M.
    Abstract: Financial institution within the USA is faced with great challenge of risk management, hence the pursuit of every financial institution to come up with better innovative ways of managing risks. However, the emerging innovation in risk management in financial institution has an underlying negative implication which is yet to be studied. The aim of this research was to explore emerging innovation in risk management in financial institutions. The research utilized qualitative research design, through an intensive literature review that involved deep research and reviewing of academic scholarly academic articles. This type of approach ensures that the research includes wide variety of sources that support this research and making it viable for future reference. Results showed that the emerging innovation in risk management in financial institutions is digital financing. Owing to the associated implication of excessive technology use, the research suggests that financial institutions should be very cautious, particularly with the associated risk of cybercrime.
    Date: 2021–06–26
  8. By: Martina Nannelli (University of Florence); Stefania Oliva (University of Florence)
    Abstract: The article aims to critically review the concept of Sharing Economy (SE) questioning its relationship with sustainability. Originated by different institutional cultures based on the principles of solidarity between the groups of a community, SE has risen as a new paradigm after the 2008’ financial and economic crisis and the advent of the digital transformation. In particular, by digital platforms, SE has evolved from an economic-social phenomenon to an economic-technological one, influencing and affecting the competitiveness of several sectors. Through a critical literature review of SE concepts, the article explores how the theoretical debate evolved over time. It identifies the main definitions and features of the phenomenon and discusses its relationship with the topic of sustainability. In the conclusions, it develops reflections on further research devoted to understanding the most controversial under-researched topics.
    Keywords: sharing economy; digital platforms; sustainability; sustainable development
    JEL: M21 Q01
    Date: 2021
  9. By: Burak Can; Jens Leth Hougaard; Mohsen Pourpouneh
    Abstract: This paper proposes a conceptual framework for the analysis of reward sharing schemes in mining pools, such as those associated with Bitcoin. The framework is centered around the reported shares in a pool instead of agents and results in two new fairness criteria, absolute and relative redistribution. These criteria impose that the addition of a share to the pool affects all previous shares in the same way, either in absolute amount or in relative ratio. We characterize two large classes of economically viable reward sharing schemes corresponding to each of these fairness criteria in turn. We further show that the intersection of these classes brings about a generalization of the well-known proportional scheme, which also leads to a new characterization of the proportional scheme as a corollary.
    Date: 2021–07
  10. By: Jesus M. Gonzalez-Barahona
    Abstract: Background: During the last years, there has been a lot of discussion and estimations on the energy consumption of Bitcoin miners. However, most of the studies are focused on estimating energy consumption, not in exploring the factors that determine it. Goal: To explore the factors that determine maximum energy consumption of Bitcoin miners. In particular, analyze the limits of energy consumption, and to which extent variations of the factors could produce its reduction. Method: Estimate the overall profit of all Bitcoin miners during a certain period of time, and the costs (including energy) that they face during that time, because of the mining activity. The underlying assumptions is that miners will only consume energy to mine Bitcoin if they have the expectation of profit, and at the same time they are competitive with respect of each other. Therefore, they will operate as a group in the point where profits balance expenditures. Results: We show a basic equation that determines energy consumption based on some specific factors: minting, transaction fees, exchange rate, energy price, and amortization cost. We also define the Amortization Factor, which can be computed for mining devices based on their cost and energy consumption, helps to understand how the cost of equipment influences total energy consumption. Conclusions: The factors driving energy consumption are identified, and from them, some ways in which Bitcoin energy consumption could be reduced are discussed. Some of these ways do not reduce the most important properties of Bitcoin, such as the chances of control of the aggregated hashpower, or the fundamentals of the proof of work mechanism. In general, the methods presented can help to predict energy consumption in different scenarios, based on factors that can be calculated from available data, or assumed in scenarios.
    Date: 2021–07
  11. By: Georgios Georgiadis (European Central Bank); Helena Le Mezo (European Central Bank); Arnaud Mehl (European Central Bank & CEPR); Cedric Tille (Geneva Graduate Institute & CEPR)
    Abstract: The US dollar plays a dominant role in the invoicing of international trade, albeit not an exclusive one as more than half of global trade is invoiced in other currencies. Of particular interest are the euro, with a large role, and the renminbi, with a rising role. These two currencies are well suited to contrast the roles of economic fundamentals and policies, as European policy makers have taken a neutral stance in contrast to the promotion of the international role of the renminbi by the Chinese authorities. We assess the drivers of invoicing using the most recent and comprehensive data set for 115 countries over 1999-2019. We find that standard mechanisms that foster use of a large economy’s currency predicted by theory—i.e. strategic complementarities in price setting and integration in cross-border value chains—underpin use of the dollar and the euro for trade with the United States and the euro area. These mechanisms also support the role of the dollar, but not the euro, in trade between non-US and non-euro area countries, making the dollar the globally dominant invoicing currency. Fundamentals and policies have played a contrasted role for the use of the renminbi. We find that China’s integration into global trade has further strengthened the dominant status of the dollar at the expense of the euro. At the same time, the establishment of currency swap lines by the People’s Bank of China has been associated with increases in renminbi invoicing, with an adverse effect on dollar use that is larger than for the euro.
    Keywords: International trade invoicing, dominant currency paradigm, markets vs. policies
    JEL: F14 F31 F44
    Date: 2021–07–06
  12. By: Cordoba, Juan Carlos; He, Sicheng
    Abstract: We study endogenous growth in the presence of domestic and international network externalities. In our model, network externalities provide natural protection to first movers and incentivize disruptive innovations without the need for patent protection. Domestic and global growth depends on the extent of network externalities, international compatibility costs, and anti-trust policies. We find that traditional anti-trust policies may lead to unintended outcomes. Policies such as banning price discrimination or collusion may reduce economic growth. In particular, price discrimination and collusion could increase economic growth when network externalities are large in relation to compatibility costs.
    Date: 2021–07–16
  13. By: Ziwei Cong; Jia Liu; Puneet Manchanda
    Abstract: The common belief about the growing medium of livestreaming is that its value lies in its "live" component. In this paper, we leverage data from a large livestreaming platform to examine this belief. We are able to do this as this platform also allows viewers to purchase the recorded version of the livestream. We summarize the value of livestreaming content by estimating how demand responds to price before, on the day of, and after the livestream. We do this by proposing a generalized Orthogonal Random Forest framework. This framework allows us to estimate heterogeneous treatment effects in the presence of high-dimensional confounders whose relationships with the treatment policy (i.e., price) are complex but partially known. We find significant dynamics in the price elasticity of demand over the temporal distance to the scheduled livestreaming day and after. Specifically, demand gradually becomes less price sensitive over time to the livestreaming day and is inelastic on the livestreaming day. Over the post-livestream period, demand is still sensitive to price, but much less than the pre-livestream period. This indicates that the vlaue of livestreaming persists beyond the live component. Finally, we provide suggestive evidence for the likely mechanisms driving our results. These are quality uncertainty reduction for the patterns pre- and post-livestream and the potential of real-time interaction with the creator on the day of the livestream.
    Date: 2021–07
  14. By: Nassim Nicholas Taleb
    Abstract: We apply quantitative finance methods and economic arguments to cryptocurrencies in general and bitcoin in particular -- as there are about $10,000$ cryptocurrencies, we focus (unless otherwise specified) on the most discussed crypto of those that claim to hew to the original protocol (Nakamoto, 2009) and the one with, by far, the largest market capitalization. In its current version, in spite of the hype, bitcoin failed to satisfy the notion of "currency without government" (it proved to not even be a currency at all), can be neither a short nor long term store of value (its expected value is no higher than $0$), cannot operate as a reliable inflation hedge, and, worst of all, does not constitute, not even remotely, a safe haven for one's investments, a shield against government tyranny, nor a tail protection vehicle for catastrophic episodes. Furthermore, there appears to be an underlying conflation between the success of a payment mechanism (as a decentralized mode of exchange), which so far has failed, and the speculative variations in the price of a zero-sum asset with massive negative externalities. Going through monetary history, we also show how a true numeraire must be one of minimum variance with respect to an arbitrary basket of goods and services, how gold and silver lost their inflation hedge status during the Hunt brothers squeeze in the late 1970s and what would be required from a true inflation hedged store of value.
    Date: 2021–06
  15. By: Naudé, Wim (University College Cork); Bray, Amy (Zindi); Lee, Celina (Zindi)
    Abstract: In this paper, we study the crowdsourcing of innovation in Africa through a data science contest on an intermediated digital platform. We ran a Machine Learning (ML) contest on the continent's largest data science contest platform, Zindi. Contestants were surveyed on their motivations to take part and their perceptions about AI in Africa. In total, 614 contestants submitted 15,832 entries, and 559 responded to the accompanying survey. From the findings, we answered several questions: who take part in these contests and why? Who is most likely to win? What are contestants' entrepreneurial aspirations in deploying AI? What are the obstacles they perceive to the greater diffusion of AI in Africa? We conclude that crowdsourcing of AI via data contest platforms offers a potential mechanism to alleviate some of the constraints in the adoption and diffusion of AI in Africa. Recommendations for further research are made.
    Keywords: crowdsourcing, innovation, data science, artificial intelligence, Africa
    JEL: O31 O33 O36 O55
    Date: 2021–07
  16. By: Michael Danquah; Solomon Owusu
    Abstract: The lingering policy dilemma facing many governments in sub-Saharan Africa in recent years is what can be done in the short to medium term to boost the output and incomes of individuals and enterprises in the informal sector, given the size and persistence of the sector in the region. In this paper we examine the structural impact of access and usage of digital technology by informal enterprises on labour productivity. Using a sample of non-farm informal enterprises in Nigeria, we employ IV LASSO techniques to carry out our analysis.
    Keywords: Information technology, Informal sector, Productivity, Instrumental variable, Regression analysis, Nigeria
    Date: 2021
  17. By: syam, muhammad alvin arkananta
    Abstract: This article tells you about how MSME and Digital Platform build their own Chemistry and had make profit because of their unique relationship
    Date: 2021–06–05
  18. By: Carol Alexander; Daniel Heck; Andreas Kaeck
    Abstract: We analyse high-frequency realised volatility dynamics and spillovers in the bitcoin market, focusing on two pairs: bitcoin against the US dollar (the main fiat-crypto pair) and trading bitcoin against tether (the main crypto-crypto pair). We find that the tether-margined perpetual contract on Binance is clearly the main source of volatility, continuously transmitting strong flows to all other instruments and receiving only a little volatility. Moreover, we find that (i) during US trading hours, traders pay more attention and are more reactive to prevailing market conditions when updating their expectations and (ii) the crypto market exhibits a higher interconnectedness when traditional Western stock markets are open. Our results highlight that regulators should not only consider spot exchanges offering bitcoin-fiat trading but also the tether-margined derivatives products available on most unregulated exchanges, most importantly Binance.
    Date: 2021–07
  19. By: Sohrab Mokhtari; Kang K. Yen; Jin Liu
    Abstract: This paper tries to address the problem of stock market prediction leveraging artificial intelligence (AI) strategies. The stock market prediction can be modeled based on two principal analyses called technical and fundamental. In the technical analysis approach, the regression machine learning (ML) algorithms are employed to predict the stock price trend at the end of a business day based on the historical price data. In contrast, in the fundamental analysis, the classification ML algorithms are applied to classify the public sentiment based on news and social media. In the technical analysis, the historical price data is exploited from Yahoo Finance, and in fundamental analysis, public tweets on Twitter associated with the stock market are investigated to assess the impact of sentiments on the stock market's forecast. The results show a median performance, implying that with the current technology of AI, it is too soon to claim AI can beat the stock markets.
    Date: 2021–06
  20. By: Andrea Baronchelli
    Abstract: Blockchains are still perceived chiefly as a new technology. But each blockchain is also a community and a social experiment, built around social consensus. Here I discuss three examples showing how collective intelligence can help, threat or capitalize on blockchain-based ecosystems. They concern the immutability of smart contracts, code transparency and new forms of property. The examples show that more research, new norms and, eventually, laws are needed to manage the interaction between collective behaviour and the blockchain technology. Insights from researchers in collective intelligence can help society rise up to the challenge.
    Date: 2021–07
  21. By: Bayudan-Dacuycuy, Connie; Baje, Lora Kryz C.
    Abstract: Platform work has the potential to help women reconcile the age-old conflict between unpaid work and market work. However, there is a degree of precariousness in platform work, one that is reminiscent of informal work. Concerns on whether platforms are new vehicles of delivering old inequalities are legitimate. This paper analyzes the issues in this emerging type of work to prevent the widening and deepening of existing inequalities, to ensure decent work in platform work, and to ensure that the work is inclusive and sustainable. It looks at the experience of Filipinos in crowdwork, a platform work that poses challenges in the enforcement of national labor laws as transactions are typically cross borders. The study finds, among others, that: (1) women are more likely to participate in platform work due to considerations of income, housework, and care economy; (2) platform work is done alongside nonplatform work; (3) past experience on the platform is an important factor in the workers’ current platform involvement; (4) the time spent on platform work peaks at minimal care work; (5) there is no gendered difference in the compensation per hour once personal and platform attributes are controlled for; and (6) the compensation per hour received by the respondents is at par with the rate of platforms known for outsourcing routine tasks (microtasks). The study also provides key takeaways to initiate conversations on national programs and initiatives that ensure sustainable and decent work on platforms. Comments to this paper are welcome within 60 days from date of posting. Email
    Keywords: social protection, Philippines, gender, crowdwork, skills development
    Date: 2021
  22. By: Cuenca, Janet S.
    Abstract: The issues and challenges in taxation in the digital economy stem from the complex and multifaceted nature of the digital economy. Reaching a common understanding and measurement of its size and impact is critical in devising a tax regime for the digital economy. In APEC Secretariat (2019), the Philippines identified the major barriers and challenges (i.e., scoping and measurement of the digital economy, the regulatory and legal framework--including sandboxes and digital infrastructure gap) to implementing structural reforms relating to the digital economy. It also identified the major policy gaps in terms of its regulatory and legal framework, competition policy, internet infrastructure improvements, and consumer education on digital economy. The opportunities and challenges that the digital economy brings are particularly important for developing countries, including the Philippines. Thus, it is deemed critical for the Philippine government to eliminate the barriers and challenges and address the identified policy gaps to fully reap the benefits from the digital economy. Also, the need for development strategies cannot be overemphasized. This paper argues that development strategies should first focus on developing domestic digital capacities. <p>Comments to this paper are welcome within 60 days from date of posting. Email
    Keywords: taxation, ICT, Digital Economy, information and communication technology, e-commerce, platform economy, digitalized economy, electronic commerce, digital tax, base erosion and profit shiftin, BEPS ?
    Date: 2021
  23. By: Lucas Nathe
    Abstract: The consumer credit market plays a prominent role in the financial life of U.S. households. Consumers' credit histories and, in particular their credit scores, are key factors that determine their access to credit and the price at which they borrow.
    Date: 2021–07–15
  24. By: Maria Carnovale; Khahlil Louisy
    Abstract: To mitigate inefficiencies in manual contact tracing processes, Digital Contact Tracing and Exposure Notifications Systems were developed for use as public-interest technologies during the SARS-CoV-2 global pandemic. Effective implementation of these tools requires alignment across several factors, including local regulations and policies and trust in government and public health officials. Careful consideration should also be made to minimize any potential conflicts with existing processes in public health which has demonstrated effectiveness. Four unique cases-of Ireland, Guayaquil, Haiti, and the Philippines-detailed in this paper will highlight the importance of upholding the principles of Scientific Validity, Necessity, Time Boundedness, and Proportionality.
    Date: 2021–07
  25. By: Luis Aguiar; Joel Waldfogel; Sarah B. Waldfogel
    Abstract: Platforms are growing increasingly powerful, raising questions about whether their power might be exercised with bias. While bias is inherently difficult to measure, we identify a context within the music industry that is amenable to bias testing. Our approach requires ex ante platform assessments of commercial promise - such as the rank order in which products are presented - along with information on eventual product success. A platform is biased against a product type if the type attains greater success, conditional on ex ante assessment. Theoretical considerations and voiced industry concerns suggest the possibility of platform biases in favor of major record labels, and industry participants also point to bias against women. Using data on Spotify curators' rank of songs on New Music Friday playlists in 2017, we find that Spotify's New Music Friday rankings favor independent-label music, along with some evidence of bias in favor of music by women. Despite challenges that independent-label artists and women face in the music industry, Spotify's New Music curation appears to favor them.
    JEL: K21 L12 L82
    Date: 2021–07
  26. By: Iazzolino, Gianluca
    Abstract: Based on an ethnography of Uber drivers in Nairobi, my article explores practices of contestation of the gig economy taking place both in the digital and physical space of the city. It argues that the labour struggle against the price policies and the control mechanisms of ride-hailing platforms like Uber foreground the tension between a subjectification from above, in which the platforms construct the drivers as independent contractors, and the shaping of subjectivities through the interaction of the drivers with the digital platforms and with one another. It also suggests that, through contestation, as the one catalysed by the call to ‘go Karura’, logging-off from the app, the workers connect their struggle to a broader critique of processes of exploitation, dependency and subalternity involving the state and international capital. While contributing to the growing literature on the gig economy in low and middle-income countries, my article brings the labour geography scholarship exploring how workers collectively shape economic spaces in conversation with the intellectual tradition of Italian Operaismo (Workerism). In doing so, it highlights the nexus of labour subjectivity and collective agency as mutually constitutive.
    Keywords: ES/P009603/1; LSE Cities Seed Grant
    JEL: R14 J01 J1
    Date: 2021–07–19
  27. By: Luca Baldo (Bank of Italy); Elisa Bonifacio (Bank of Italy); Marco Brandi (Bank of Italy); Michelina Lo Russo (Bank of Italy); Gianluca Maddaloni (Bank of Italy); Andrea Nobili (Bank of Italy); Giorgia Rocco (Bank of Italy); Gabriele Sene (Bank of Italy); Massimo Valentini (Bank of Italy)
    Abstract: In this study, we assess the main drivers of banknote circulation in Italy over the last decades by using a number of econometric tools proposed in the literature. We explore the role played by the banknote flows from abroad, changes in the institutional framework and disentangle domestic demand for transaction purposes from other components, including liquidity hoarding. We find that changes in legal limits on cash payment and money holdings for precautionary reasons explain the bulk of cash dynamics. Moreover, the share of transaction demand declined over time becoming of second-order. Finally, we find that, during the pandemic from Covid-19, the exceptional raise in cash circulation was mostly the result of an increase in precautionary demand due to both economic uncertainty and restrictions to mobility that resulted into a marked decline of lodgments to the central bank.
    Keywords: cash circulation, cash, payment habits, Covid-19 pandemic
    JEL: E41 E42 G2
    Date: 2021–07
  28. By: Anantha Divakaruni; Peter Zimmerman
    Abstract: In April 2020, the US government sent economic impact payments (EIPs) directly to households, as part of its measures to address the COVID-19 pandemic. We characterize these stimulus checks as a wealth shock for households and examine their effect on retail trading in Bitcoin. We find a significant increase in Bitcoin buy trades for the modal EIP amount of $1,200. The rise in Bitcoin trading is highest among individuals without families and at exchanges catering to nonprofessional investors. We estimate that the EIP program has a significant but modest effect on the US dollar–Bitcoin trading pair, increasing trade volume by about 3.8 percent. Trades associated with the EIPs result in a slight rise in the price of Bitcoin of 7 basis points. Nonetheless, the increase in trading is small compared to the size of the stimulus check program, representing only 0.02 percent of all EIP dollars. We repeat our analysis for other countries with similar stimulus programs and find an increase in Bitcoin buy trades in these currencies. Our findings highlight how wealth shocks affect retail trading.
    Keywords: Bitcoin; COVID-19; economic impact payments; stimulus checks
    JEL: E42 G11 G41 H31
    Date: 2021–07–16
  29. By: Helmut Wasserbacher; Martin Spindler
    Abstract: This article is an introduction to machine learning for financial forecasting, planning and analysis (FP\&A). Machine learning appears well suited to support FP\&A with the highly automated extraction of information from large amounts of data. However, because most traditional machine learning techniques focus on forecasting (prediction), we discuss the particular care that must be taken to avoid the pitfalls of using them for planning and resource allocation (causal inference). While the naive application of machine learning usually fails in this context, the recently developed double machine learning framework can address causal questions of interest. We review the current literature on machine learning in FP\&A and illustrate in a simulation study how machine learning can be used for both forecasting and planning. We also investigate how forecasting and planning improve as the number of data points increases.
    Date: 2021–07
  30. By: Koppe, Timo; Eckert, Bastian AE
    Date: 2021–07
  31. By: International Monetary Fund
    Abstract: he Hong Kong Special Administrative Region (HKSAR) is among the world’s major fintech hubs, well positioned to develop fintech initiatives from its traditional strengths in financial services. Key factors enabling the HKSAR to emerge as a fintech hub include its presence as an international financial center, its free-flowing talent and capital, a highly developed information and technology communication (ITC) infrastructure, and its most unique trait, a geographical and strategic advantage by proximity to the market in Mainland China.
    Keywords: People's Republic of China-Hong Kong Special Administrative Region FSAP; banking Supervision department; Hong Kong exchange; People's republic of china-Hong kong special administrative region; banking ordinance; Fintech; Blockchain and DLT; Financial sector; Artificial intelligence; Global
    Date: 2021–06–15
  32. By: Orkun Saka; Barry Eichengreen; Cevat Giray Aksoy
    Abstract: We ask whether epidemic exposure leads to a shift in financial technology usage within and across countries and if so who participates in this shift. We exploit a dataset combining Gallup World Polls and Global Findex surveys for some 250,000 individuals in 140 countries, merging them with information on the incidence of epidemics and local 3G internet infrastructure. Epidemic exposure is associated with an increase in remote-access (online/mobile) banking and substitution from bank branch-based to ATM-based activity. Using a machine-learning algorithm, we show that heterogeneity in this response centers on the age, income and employment of respondents. Young, high-income earners in full-time employment have the greatest propensity to shift to online/mobile transactions in response to epidemics. These effects are larger for individuals in subnational regions with better ex ante 3G signal coverage, highlighting the role of the digital divide in adaption to new technologies necessitated by adverse external shocks.
    Keywords: epidemics, fintech, banking
    JEL: G20 G59 I10
    Date: 2021
  33. By: Kiran Javaria (University of Lahore); Omar Masood (University of Lahore); Fernando Garcia (Polytechnic University of Valencia)
    Abstract: The study investigates the management of risk in E-Commerce and what different barriers are faced by consumers during an uncertain and risky situation. The study utilizes both primary and secondary data in order to get reliable results. There are different risk factors that affect the purchasing behaviour of consumers who shop online. The consumer's perception of risk may be the result of all the emotional processes through which consumers recognize, organize and provide meaning to sensations received, such as the need for product quality, safety online and overall satisfaction. The primary data consists of a survey of online shoppers. The research data and questionnaire was administered to 972 internet users who are classed as experienced and avid users. The secondary data includes an analysis of the various theories of consumer behaviour, models of online adoption, risk factors to marketing and shopping online, models of the adoption of innovation and new ways of marketing and trade. Both techniques are utilized that would examine the relationship between perceived risk strategies and customer satisfaction as well as examined the customer involvement and propensity to take risk on existing relation of online shopping.
    Keywords: E-commerce,risk management,financial manager,perceived risk strategies,customer satisfaction,customer involvement,propensity to take risk
    Date: 2020–12–30
  34. By: Amélie Artis (IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UGA - Université Grenoble Alpes); Kouassi N’goran (UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UPVD - Université de Perpignan Via Domitia - UPVM - Université Paul-Valéry - Montpellier 3 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This article examines the institutionalization process of microfinance in its ability to diffuse its rules and visions into the financial and banking sector as well as into development policies. This research presents how the practices, the discourse and the specific ideals of this social innovation diffuse into different sectors with different funding logics. Institutionalist theory allows us to describe the process of of institutionalization of this socio-economic practice with conventional organizations. This article highlights different channels of diffusion to demonstrate that microfinance has become a microfinance has become a financial institution in thirty years.
    Abstract: Cet article examine le processus d'institutionnalisation de la microfinance dans sa capacité à diffuser ses règles et ses visions tant dans le secteur financier et bancaire que dans les politiques de développement. Cette recherche présente comment les pratiques, le discours tenu et les idéaux spécifiques de cette innovation sociale se diffusent dans différents secteurs aux logiques de financement différentes. La théorie institutionnaliste nous permet de décrire le processus d'institutionnalisation de cette pratique socioéconomique auprès d'organismes conventionnels. Différents canaux de diffusion sont mis en exergue, dans le cadre cet article, pour démontrer que la microfinance est devenue en trente ans une institution financière.
    Keywords: Microfinance,Institution,Institutionnalisation,Développement Microfinance,Développement
    Date: 2019–12–05
  35. By: Ojo/Roedl, Marianne
    Abstract: The implications of COVID developments for monetary policy will certainly extend beyond the increased use of digital platforms and payments. The current environment is also focused on smart green techniques and green initiatives aimed at promoting a transition to a net zero based carbon emissions economy. During the onset of the pandemic, it was initially thought that carbon emissions would fall drastically – given the impact of the pandemic, not only on the airlines industry, but also as a result of “Stay at Home” measures imposed by jurisdictions, which even made it illegal to drive to certain places, where purposes for doing so were unjustified. However, the pandemic has also witnessed unprecedented levels in digital subscriptions, online sales and marketing – also fueled through digital payments and the use of digital platforms and distributed ledger technologies in facilitating cashless payments – cash, namely bank notes and coins, also being considered to be a medium of COVID transmission. Coupled with attributes such speed, convenience and ease, the need for financial inclusion has also become an objective in facilitating the era of innovative digital means of payments. As well as considering the current implications of measures that have been instigated to address the impacts of the pandemic, drawing from past and current lessons from selected jurisdictions, this paper also considers why the transition to a net zero carbon economy may prove more challenging than may first appear. However, jurisdictional differences and historical developments will play a part in determining how sustainable certain implemented policies and measures are – as well as in facilitating a transition to normality.
    Keywords: EU Green Deal; sustainable finance, interest rates; inflation; pandemic asset purchase program (PEPP); APP asset purchase program; longer term financing operations; transition risks; financial stability; CBDCs
    JEL: E5 G21 G28 G3 G38 K2
    Date: 2021–06–02
  36. By: Supriya Bajpai
    Abstract: In stock trading, feature extraction and trading strategy design are the two important tasks to achieve long-term benefits using machine learning techniques. Several methods have been proposed to design trading strategy by acquiring trading signals to maximize the rewards. In the present paper the theory of deep reinforcement learning is applied for stock trading strategy and investment decisions to Indian markets. The experiments are performed systematically with three classical Deep Reinforcement Learning models Deep Q-Network, Double Deep Q-Network and Dueling Double Deep Q-Network on ten Indian stock datasets. The performance of the models are evaluated and comparison is made.
    Date: 2021–05

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.