nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2021‒11‒29
twenty-six papers chosen by

  1. Fintech Potential for Remittance Transfers: A Central America Perspective By Julia Bersch; Mrs. Esther Perez Ruiz; Mr. Yorbol Yakhshilikov; Jean François Clevy; Naseem Muhammad
  2. The Little Engines That Could – Game Industry Platforms and the New Drivers of Digitalization By Mattila, Juri; Seppälä, Timo; Salakka, Kaisa
  3. Is Mobile Money Part of Money? Understanding the Trends and Measurement By Ms. Kazuko Shirono; Mr. Hector Carcel Villanova; Esha Chhabra; Ms. Bidisha Das; Ms. Yingjie Fan
  4. Should Central Banks Issue Digital Currency? By Todd Keister; Daniel R. Sanches
  5. Understanding jumps in high frequency digital asset markets By Saef, Danial; Nagy, Odett; Sizov, Sergej; Härdle, Wolfgang
  6. Use of Mobile Financial Services Among Farmers in Africa: Insights from Kenya By Parlasca, Martin; Johnen, Constantin; Qaim, Matin
  7. The one trillion euro digital currency: How to issue a digital euro without threatening monetary policy transmission and financial stability? By Paolo Fegatelli
  8. FinTech Lending By Tobias Berg; Andreas Fuster; Manju Puri
  9. Fintech and Financial Inclusion: The Fifth Annual Fintech Conference By Patrick T. Harker
  10. Data governance and the regulation of the platform economy By Oscar Borgogno; Michele Savini Zangrandi
  11. A literature review on blockchain in accounting research By Marco Bellucci; Damiano Cesa Bianchi; Giacomo Manetti
  12. FinTech as a Financial Liberator By Greg Buchak; Jiayin Hu; Shang-Jin Wei
  13. COVID-19 pandemic increases the divide between cash and cashless payment users in Europe By Radoslaw Kotkowski; Michal Polasik
  14. Spurring growth and closing gaps through digitalisation in a post-COVID world: Policies to LIFT all boats By Mauro Pisu; Christina von Rüden; Hyunjeong Hwang; Giuseppe Nicoletti
  15. Quality Selection in Two-Sided Markets: A Constrained Price Discrimination Approach By Johari, Ramesh; Light, Bar; Weintraub, Gabriel Y.
  16. Does IT Help? Information Technology in Banking and Entrepreneurship By Mr. Yannick Timmer; Mr. Nicola Pierri; Toni Ahnert; Sebastian Doerr
  17. Does Social Media cause Polarization? Evidence from access to Twitter Echo Chambers during the 2019 Argentine Presidential Debate By Rafael Di Tella; Ramiro H. Gálvez; Ernesto Schargrodsky
  18. Dynamic Pricing of Credit Cards and the Effects of Regulation By Suting Hong; Robert M. Hunt; Konstantinos Serfes
  19. Zero-Liquidation Loans: A Structured Product Approach to DeFi Lending By Aetienne Sardon
  20. Artificial Intelligence, Surveillance, and Big Data By David Karpa; Torben Klarl; Michael Rochlitz
  21. Effects of Attention and Recognition on Engagement, Content Creation and Sharing: Experimental Evidence from an Image Sharing Social Network By Huang, Justin T.; Narayanan, Sridhar
  22. Reflections on Stablecoins and Payments Innovations: a speech at "Planning for Surprises, Learning from Crises" 2021 Financial Stability Conference, cohosted by the Federal Reserve Bank of Cleveland and the Office of Financial Research, Cleveland, Ohio (via webcast), November 18, 2021 By Christopher J. Waller
  23. No Easy Solution: A Smorgasbord of Factors Drive Remittance Costs By Tito Nícias Teixeira da Silva Filho
  24. Internet Access for Children’s Online Schooling during the COVID-19 Pandemic and Parental Mental Health By Kien, Le
  25. Financial Dollarization in Argentina: A Historical Analysis of a Current Restriction By Eduardo Corso
  26. The asymmetric effect of internet access on economic growth in sub-Saharan Africa By Idris A. Abdulqadir; Simplice A. Asongu

  1. By: Julia Bersch; Mrs. Esther Perez Ruiz; Mr. Yorbol Yakhshilikov; Jean François Clevy; Naseem Muhammad
    Abstract: This paper analyzes the potential for fintech to facilitate cheaper and more efficient remittances, and to enhance financial inclusion in Central America. Digital remittances remain nascent in the region, primarily reflecting behavioral inertia, small cost advantages of digital over traditional channels, and inadequate financial literacy. Through expanded alliances between traditional and fintech operators, digital remittances can further reduce transaction costs and reach those remote, low-income households in a timely and secure manner. A meaningful expansion of fintech remittances necessitates an enabling regulatory environment for digital financial services, and KYC and AML/CFT requirements proportionate to the value of transfers.
    Keywords: remittances digitalization; Fintech remittance; remittances corridor; C. remittances cost; remittances' fee; Remittances; Mobile banking; Financial inclusion; Fintech; Global; Central America; Caribbean; South Asia; East Asia
    Date: 2021–06–25
  2. By: Mattila, Juri; Seppälä, Timo; Salakka, Kaisa
    Abstract: Abstract In a recent trend in digitalization, many platform incumbents have steered their focus towards creating collectively shared persistent virtual frameworks known as ‘metaverses’. Due to the emergence of digital platforms in the game industry over the last decade, the industry is now challenging the digital platform incumbents in metaverse development. Will the development unlock new data-driven markets, how will the landscape of digital platforms be reconfigured, and what are the strategic and policy implications for Finland and the European Union?
    Keywords: Game Engine, Virtual Reality, Metaverse, Platform, Platform Business Group (PBG) Strategy, System of Systems, Digitalization
    JEL: L8 L82 O3 O33
    Date: 2021–11–18
  3. By: Ms. Kazuko Shirono; Mr. Hector Carcel Villanova; Esha Chhabra; Ms. Bidisha Das; Ms. Yingjie Fan
    Abstract: The rapid uptake of mobile money in recent years has generated new data needs and growing interest in understanding its impact on broad money. This paper reviews mobile money trends using mobile money data from the Financial Access Survey (FAS) and examines the statistical treatment of mobile money under the IMF’s Monetary and Financial Statistics (MFS) framework. MFS guidance is straightforward in most cases, as many jurisdictions have adopted regulations which ensure that mobile money is captured in the banking system and thus in the calculation of broad money. However, in cases where mobile network operators (MNOs) act as niche financial intermediaries outside the banking regulatory perimeter and are allowed to invest their customer funds in sovereign securities and other permitted assets, mobile money liabilities may remain outside the banking system as well as monetary statistics. In that case, information on mobile money liabilities need to be collected directly from MNOs to account for mobile money as part of broad money.
    Keywords: usage pattern; money account; customer funds; value chain; agent outlet; money issuer; measurement issue; monetary value; Mobile banking; Monetary base; Monetary statistics; Financial statistics; West Africa
    Date: 2021–07–01
  4. By: Todd Keister; Daniel R. Sanches
    Abstract: We study how the introduction of central bank digital currency affects interest rates, the level of economic activity, and welfare in an environment where both central bank money and private bank deposits are used in exchange. We highlight an important policy tradeoff: While a digital currency tends to promote efficiency in exchange, it may also crowd out bank deposits, raise banks’ funding costs, and decrease investment. We derive conditions under which targeted digital currencies, which compete only with physical currency or only with bank deposits, raise welfare. If such targeted currencies are infeasible, we illustrate the policy tradeoffs that arise when issuing a single, universal digital currency.
    Keywords: Monetary policy; public vs. private money; electronic payments; liquidity premium; disintermediation
    JEL: E42 E58 G28
    Date: 2021–11–03
  5. By: Saef, Danial; Nagy, Odett; Sizov, Sergej; Härdle, Wolfgang
    Abstract: While attention is a predictor for digital asset prices, and jumps in Bitcoin prices are well-known, we know little about its alternatives. Studying high frequency crypto data gives us the unique possibility to confirm that cross market digital asset returns are driven by high frequency jumps clustered around black swan events, resembling volatility and trading volume seasonalities. Regressions show that intra-day jumps significantly influence end of day returns in size and direction. This provides fundamental research for crypto option pricing models. However, we need better econometric methods for capturing the specific market microstructure of cryptos. All calculations are reproducible via the technology.
    Keywords: jumps,market microstructure noise,high frequency data,cryptocurrencies,CRIX,option pricing
    Date: 2021
  6. By: Parlasca, Martin; Johnen, Constantin; Qaim, Matin
    Keywords: Agricultural Finance
    Date: 2021–08
  7. By: Paolo Fegatelli
    Abstract: The introduction of a general-purpose central bank digital currency (CBDC) carries the risk of bank disintermediation, potentially jeopardizing financial stability and monetary policy transmission through the bank lending channel. By adapting the theoretical framework of Dutkowsky and VanHoose (2018b, 2020) to the euro area, this study clarifies the conditions under which a digital euro could be introduced on a large scale without leading to bank disintermediation or a credit crunch. First, the central bank would need to set up proper mechanisms to manage the volume and the user cost of CBDC in circulation. Second, since some bank deposits will be converted into CBDC, the central bank should continue to facilitate access to its long-term lending facilities in order to provide banks with an alternative funding source at an equivalent cost. Depending on its design, a digital euro could improve bank profitability by absorbing large amounts of idle (and expensive) excess reserves without penalizing lending. A digital euro could also improve banks’ competitive position relative to non-bank lenders and encourage bank digitalization.
    Keywords: Central bank digital currency, cash, central bank, monetary policy, excess reserves, reserve requirements, universal central bank reserves, bank deposits, bank profitability, bank credit, inside money, collateral
    JEL: E41 E42 E51 E52 E58 G21
    Date: 2021–08
  8. By: Tobias Berg; Andreas Fuster; Manju Puri
    Abstract: In this paper, we review the growing literature on FinTech lending – the provision of credit facilitated by technology that improves the customer-lender interaction or lenders’ screening and monitoring of borrowers. FinTech lending has grown rapidly, though in developed economies like the U.S. it still only accounts for a small share of total credit. An increase in convenience and speed appears to have been more central to FinTech lending’s growth than improved screening or monitoring, though there is certainly potential for the latter, as is the case for increased financial inclusion. The COVID-19 pandemic has shown potential vulnerabilities of FinTech lenders, although in certain segments they have displayed rapid growth.
    JEL: G2 G20 G21 G23
    Date: 2021–10
  9. By: Patrick T. Harker
    Abstract: Speaking to a virtual audience at the Fifth Annual Fintech Conference, Philadelphia Fed President Patrick T. Harker said he sees great opportunities in using fintech as a tool to promote financial inclusion. But he cautioned that human judgment is still responsible for training algorithms and determining how financial technologies operate.
    Date: 2021–11–16
  10. By: Oscar Borgogno (Bank of Italy); Michele Savini Zangrandi (Bank of Italy)
    Abstract: Systematic data exploitation through digital means lays at the very heart of the current platform economy. The regulatory boundaries posed by legislation to what firms and individuals can do with this intangible asset fall under the broad concept of data governance. We argue that the three major regulatory policy fields critical in shaping a country’s data governance framework are data control, national security and competition law. These legislative strands have a profound impact on the platform economy and overlap with each other in a significant manner. In exploring the complex trade-offs, this paper reaches three broad conclusions. First, multiple and diverse regulatory domains intersect the digital space, with overlapping and sometimes unpredictable consequences. Second, given the transnational nature of digital activity, international coordination and dialogue are of the utmost importance. Third, as the data governance framework has important consequences for the financial sector, sectoral regulators should be open to taking an active part in national and international discussions.
    Keywords: digital platforms, data, competition policy, national security, data access, privacy.
    JEL: F53 K21 K24 L38
    Date: 2021–11
  11. By: Marco Bellucci (University of Florence); Damiano Cesa Bianchi (University of Florence); Giacomo Manetti (University of Florence)
    Abstract: This study aims to review the academic literature on the utilization of blockchain in accounting practice and research to define potential opportunities for further scientific investigation and to provide a framework on how accounting practice has been or will be impacted by blockchain. This study is based on a systematic literature review of 234 research products available on Scopus, which were mapped through bibliometric analyses and critically discussed through five main topics related to the impact of blockchain on accounting, auditing, crypto assets, supply management, and finance. Blockchain has many potential implications for accounting practice and research. Accountants and auditors are interested in triple-entry bookkeeping and the inalterability of blockchains. Accountant and auditor roles might change, focusing more on non-automated activities. However, blockchain could also play a more central role in social and environmental accounting and reporting because there are fewer confidentiality issues than financial data. The problem of the representation of cryptocurrencies in the financial statements following the IFRS interpretations commission can be considered clarified, but significant audit and taxation issues remain. Moreover, blockchain technology holds potentialities for innovating business models in many diverse sectors. The novel contribution of this study is threefold. First, this SLR provides a clear picture of the state of accounting research on blockchain. Second, it provides an investigation of how accounting practice will be impacted by blockchain. Third, it contributes to the accounting literature with a discussion of the potential future research trends in blockchain for accounting.
    Keywords: Blockchain, Cryptoassets, Triple-entry bookkeeping, real-time accounting, continuous auditing
    JEL: M40 M41 M42
    Date: 2021
  12. By: Greg Buchak; Jiayin Hu; Shang-Jin Wei
    Abstract: A binding interest rate cap on household savings is a common form of financial repression in developing economies and typically benefits banks. Using proprietary data from a leading Chinese FinTech company, we study Fintech's role in ending financial repression in China through the introduction of a money market fund with deposit-like features available through an already widely-adopted household payment platform. Cities and banks whose depositor base is more exposed to FinTech see greater deposit outflows. Importantly, exposed banks respond to FinTech competition by offering competing products with market interest rates. FinTech thus facilitates a bottom-up interest rate liberalization.
    JEL: E21 E42 E43 E44 E52 E58 G21 G28 G51
    Date: 2021–11
  13. By: Radoslaw Kotkowski (Narodowy Bank Polski); Michal Polasik (Nicolaus Copernicus University)
    Abstract: This paper investigates the way in which the COVID-19 pandemic has changed an important aspect of everyday life, viz. how people make payments. The empirical study is based on a survey of over 5,000 respondents from 22 European countries. It shows that consumers who had been making cashless payments prior to the outbreak of the pandemic have been even more likely to do so since it broke out. On the other hand, the consumers who had mostly been paying in cash have often continued to do so. Results indicate that the usage of banking and payment innovations proved to be the catalyst leading to the growth of cashless payment usage. The divide between those who pay in cash and those who do not, therefore, seems to have widened during the pandemic. We found that the probability of more frequent cashless payments as a result of the pandemic differs considerably between countries and therefore depends on local conditions. The results indicate that the pandemic has exacerbated major financial inclusion issues and that this needs to be addressed by policymakers, but also that further analysis of factors differentiating usage of cash and the cashless instrument is needed.
    Keywords: COVID-19 pandemic; Cash; Cashless payments; Change in payment behaviour
    JEL: E41 E42 I12 I18
    Date: 2021
  14. By: Mauro Pisu; Christina von Rüden; Hyunjeong Hwang; Giuseppe Nicoletti
    Abstract: The full potential of digital technologies remains unrealised and their benefits unequally shared because of insufficient investment in enabling intangible assets and communication networks within and across countries. The COVID-19 shock poses new challenges and opportunities. Drawing on past and ongoing OECD work, the paper proposes a multipronged policy approach to durably accelerate the diffusion and uptake of digital technologies across all layers of society, and share their benefits more widely. The building blocks of the proposed LIFT approach include: Lifelong learning for all to ensure everybody has the opportunity to acquire and upgrade the skills needed to thrive in a digital world; Intangibles finance for the knowledge economy to allow more firms, especially small ones, to increase intangible investment and seize the opportunities offered by the digital transformation; Framework market conditions for the digital age to upgrade policies to the digital age, especially in the areas of taxation, competition law and enforcement, digital security, firms’ entry and exit, and e-government; Technology access via digital infrastructure to facilitate access to communication networks and accelerate the take up of digital technologies and their international diffusion.
    Keywords: Compensation, Competition Policy, Education and Inequality, Firm Growth, Firm Performance, Innovation Policy, Skill Biased, SME, Technology Adoption, Technology and Competitiveness, Wages
    JEL: L25 L4 O32 O33 O38 I24 J3
    Date: 2021–11–26
  15. By: Johari, Ramesh (Stanford U); Light, Bar (Stanford U); Weintraub, Gabriel Y. (Stanford U)
    Abstract: Online platforms collect rich information about participants and then share some of this information back with them to improve market outcomes. In this paper we study the following information disclosure problem in two-sided markets: If a platform wants to maximize revenue, which sellers should the platform allow to participate, and how much of its available information about participating sellers' quality should the platform share with buyers? We study this information disclosure problem in the context of two distinct two-sided market models: one in which the platform chooses prices and the sellers choose quantities (similar to ride-sharing), and one in which the sellers choose prices (similar to e-commerce). Our main results provide conditions under which simple information structures commonly observed in practice, such as banning certain sellers from the platform while not distinguishing between participating sellers, maximize the platform's revenue. An important innovation in our analysis is to transform the platform's information disclosure problem into a constrained price discrimination problem. We leverage this transformation to obtain our structural results.
    Date: 2021–01
  16. By: Mr. Yannick Timmer; Mr. Nicola Pierri; Toni Ahnert; Sebastian Doerr
    Abstract: This paper analyzes the importance of information technology (IT) in banking for entrepreneurship. To guide our empirical analysis, we build a parsimonious model of bank screening and lending that predicts that IT in banking can spur entrepreneurship by making it easier for startups to borrow against collateral. We provide empirical evidence that job creation by young firms is stronger in US counties that are more exposed to ITintensive banks. Consistent with a strengthened collateral lending channel for IT banks, entrepreneurship increases more in IT-exposed counties when house prices rise. In line with the model's implications, IT in banking increases startup activity without diminishing startup quality and it also weakens the importance of geographical distance between borrowers and lenders. These results suggest that banks' IT adoption can increase dynamism and productivity.
    Keywords: technology in banking, entrepreneurship, information technology, collateral, screening; banks' IT adoption; importance of information technology; IT in banking; startup activity; bank screening; Collateral; Self-employment; Employment; Job creation
    Date: 2021–08–06
  17. By: Rafael Di Tella; Ramiro H. Gálvez; Ernesto Schargrodsky
    Abstract: We study how two groups, those inside vs those outside echo chambers, react to a political event when we vary social media status (Twitter). Our treatments mimic two strategies often suggested as a way to limit polarization on social media: they expose people to counter-attitudinal data, and they get people to switch off social media. Our main result is that subjects that started inside echo chambers became more polarized when these two strategies were implemented. The only scenario where they did not become more polarized is when they did not even experience the political event. Interestingly, subjects that were outside echo chambers before our study began experienced no change (or a reduction) in polarization. We also study a group of non-Twitter users in order to have a simple, offline benchmark of the debate’s impact on polarization.
    JEL: D72 L82 L86 O33 P16 Z13
    Date: 2021–11
  18. By: Suting Hong; Robert M. Hunt; Konstantinos Serfes
    Abstract: We construct a two-period model of revolving credit with asymmetric information and adverse selection. In the second period, lenders exploit an informational advantage with respect to their own customers. Those rents stimulate competition for customers in the first period. The informational advantage the current lender enjoys relative to its competitors determines interest rates, credit supply, and switching behavior. We evaluate the consequences of limiting the repricing of existing balances as implemented by recent legislation. Such restrictions increase deadweight losses and reduce ex-ante consumer surplus. The model suggests novel approaches to identify empirically the effects of this law. We find the pattern of changes to interest rates and balance transfer activity before and after the CARD Act are consistent with the testable implications of the model.
    Keywords: Financial contracts; Credit Card Accountability Responsibility and Disclosure Act; holdup; risk-based pricing; credit supply
    JEL: D14 D18 D86 G28 K12
    Date: 2021–11–23
  19. By: Aetienne Sardon
    Abstract: Zero-Liquidation loans allow DeFi users to borrow USDC against their ETH holdings, but without the risk of being liquidated in case of LTV shortfalls. This is achieved by giving users the option to repay their loans, either in USDC or through their previously pledged ETH (the concept can be generalized to other currency pairs as well). Liquidity providers, on the other hand side, are compensated with a higher yield for bearing the ETH downside risk. A positive side effect of zero-liquidation loans is that they are more robust against flash crashes and have a lower financial contagion effect than current lending and borrowing protocols.
    Date: 2021–10
  20. By: David Karpa; Torben Klarl; Michael Rochlitz
    Abstract: The most important resource to improve technologies in the field of artificial intelligence is data. Two types of policies are crucial in this respect: privacy and data-sharing regulations, and the use of surveillance technologies for policing. Both types of policies vary substantially across countries and political regimes. In this chapter, we examine how authoritarian and democratic political institutions can influence the quality of research in artificial intelligence, and the availability of large-scale datasets to improve and train deep learning algorithms. We focus mainly on the Chinese case, and find that -- ceteris paribus -- authoritarian political institutions continue to have a negative effect on innovation. They can, however, have a positive effect on research in deep learning, via the availability of large-scale datasets that have been obtained through government surveillance. We propose a research agenda to study which of the two effects might dominate in a race for leadership in artificial intelligence between countries with different political institutions, such as the United States and China.
    Date: 2021–11
  21. By: Huang, Justin T. (U of Michigan); Narayanan, Sridhar (Stanford U)
    Abstract: In this study, we examine the impacts of attention and recognition received by a user's content on a social network on that user's subsequent engagement on the network, content creation and content sharing. The study of the impact of attention and recognition is typically challenging because they are not randomly assigned. Systematic differences within and across users in the degree of attention and recognition received by content shared by them makes the identification of effects difficult. To solve this identification problem, we implemented a field experiment in collaboration with an art-sharing social network, where we experimentally manipulated attention and recognition by selectively featuring users' content. A unique aspect of our experimental context is that we are able to observe both on-network and off-network activity of the individuals concerned. The main results of our experiment are that our manipulation shifting attention and recognition on the network increases engagement, tie-formation, posting of creative output and the usage of underlying software tools used to create content. We explore the temporal variation, heterogeneity, and mediation in these effects.
    Date: 2020–12
  22. By: Christopher J. Waller
    Date: 2021–11–18
  23. By: Tito Nícias Teixeira da Silva Filho
    Abstract: There has been a global push to decrease the cost of remittances since at least 2009, which has culminated with its inclusion in the Sustainable Development Goals in 2015. Despite this effort and the emergence of new business models, remittance costs have been decreasing very slowly, disproving predictions that sharp declines would be just around the corner. In addition, remitting to poorer countries remains very expensive. Oddly, this situation has not been able to elicit academic interest on the drivers of remittance costs. This paper delved deeply into the remittances ecosystem and found a very complex, heterogenous and unequal environment, one in which costs are driven by a myriad of factors and where there are no easy and quick solutions available, which explains the disappointing outcome so far. Nonetheless, it also shows that while policymakers have limited room to act they still have a very important role to play.
    Keywords: remittance cost; remittances ecosystem; factors drive remittance; receiving country; remittance price; Remittances; Medium taxpayer office; Global; North America; Central America
    Date: 2021–07–30
  24. By: Kien, Le
    Abstract: Thе оutbrеаk оf thе соrоnаvirus disеаsе 2019 (COVID-19) саusing milliоns оf pеоplе tо bе infесtеd hаs pоsеd mаjоr publiс hеаlth аnd gоvеrnаnсе сhаllеngеs. This study еvаluаtеs thе еxtеnt tо whiсh thе unаvаilаbility оf intеrnеt fоr сhildrеn tо lеаrn оnlinе during thе pаndеmiс аffесts pаrеntаl psyсhоlоgiсаl wеllbеing. Wе find thаt pаrеnts hаving nо intеrnеt fоr thеir сhildrеn tо lеаrn оnlinе during tо thе pаndеmiс аrе 40.37, 47.22, 43.68, аnd 46.90 pеrсеntаgе pоints mоrе likеly tо fееl аnxiоus, wоrriеd, displеаsеd, аnd dеprеssеd еvеry dаy. Thе study саlls fоr thе еxpаnsiоn оf suppоrts fоr сhildrеn аnd fаmiliеs during thе pаndеmiс, еspесiаlly fоr disprоpоrtiоnаtеly аffесtеd соmmunitiеs.
    Keywords: COVID-19; Onlinе Sсhооl; Intеrnеt; Mеntаl Hеаlth
    JEL: I10 I12 I18
    Date: 2020
  25. By: Eduardo Corso (Central Bank of Argentina)
    Abstract: For more than half a century, the evolution of saving patterns in Argentina has been characterized by the dollarization of households and firms’ stores of value. We will explore the main elements that conditioned the saving decisions of households and firms throughout the argentine monetary history. To this end, we will begin by analyzing the evolution of the real returns of the main private sector’s stores of value over almost eighty years. Understanding the effects of changing monetary and exchange rate environments on real returns, constitutes a central element of the analysis. It allows us to shed light on asset substitution between stores of value denominated in local currency and those denominated in dollars. From a methodological perspective, in order to rationalize the households and firms’ stores of value demands, we will use optimal portfolio selection approaches under alternative preferences schemes. The main contribution of this article is to use portfolio theory to show that the dollarization of private sector stores of value observed in Argentina for more than fifty years constitutes an adaptive response by households and firms exposed to uncertain economic environments, characterized by disruptive exchange rate shocks and persistent inflationary processes.
    Keywords: dollarization, store of value, portfolio selection
    JEL: E41 E44 G11
    Date: 2021–07
  26. By: Idris A. Abdulqadir (Federal University Dutse, Dutse, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This article investigates the asymmetric effect of internet access (index of the internet) on economic growth in 42 sub-Saharan African (SSA) countries over the period 2008-2018. The estimation procedure is obtained following a dynamic panel threshold regression technique via 1000 bootstrap replications and the 400 grids search developed by Hansen (1996, 1999, 2000). The investigation first explores the presence of inflection points in the relationship between internet access and economic growth through the application of Hansen's threshold models. The finding from the nonlinearity threshold model revealed a significant internet threshold-effect of 3.55 percent for growth. The article also examines the linear short-run effect of internet access on economic growth while controlling for the effects of private sector credit, trade openness, government regulation, and tariff regimes. The marginal effect of internet access is evaluated at the minimum, and the maximum levels of government regulation and tariffs regime are positive. On the other hand, the minimum and maximum levels of private sector credit and trade openness are negative via the interaction terms. The article advances the literature by its nonlinear transformation of the relevance of internet access on economic growth by exploring interactive mechanisms of: internet access versus financial resource, internet access versus trade, internet access versus government regulation, and internet access versus the tariff regimes from end-user subscriptions. In policy terms, the statistical significance of the joint impact of government regulations and tariff regimes is relevant in the operation of the telecommunication industry in SSA countries.
    Keywords: Internet access; economic growth; government regulations; trade openness; tariff regimes; sub-Saharan Africa
    Date: 2021–01

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