nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2022‒02‒14
thirty papers chosen by
Bernardo Bátiz-Lazo
Northumbria University

  1. The of role economic growth in modulating mobile connectivity dynamics for financial inclusion in developing countries By Simplice A. Asongu; Nicholas M. Odhiambo
  2. Women's mobile phone access and use: A snapshot of six states in India By Sonne, Lina
  3. Stablecoins: Growth Potential and Impact on Banking By John Caramichael; Gordon Y. Liao
  4. Competitors’ Reactions to Big Tech Acquisitions: Evidence from Mobile Apps By Pauline Affeldt; Reinhold Kesler
  5. Non-Fungible Tokens (NFTs) – Regulation Vacuum and Challenges for Romania By Bogdan Radu
  6. Mobile money adoption and entrepreneurs’ access to trade credit in the informal sector By Tetteh, Godsway Korku; Goedhuys, Micheline; Konte, Maty; Mohnen, Pierre
  7. Hedging cryptos with Bitcoin futures By Liu, Francis; Packham, Natalie; Lu, Meng-Jou; Härdle, Wolfgang
  8. Voice assistants as gatekeepers for consumption? How information intermediaries shape competition By Noskova, Victoriia
  9. Measuring the online platform economy in Germany By Hildenbrand, Hannah-Maria; von Rueden, Christina; Viete, Steffen
  10. Platform scams: Brazilian workers’ experiences of dishonest and uncertain algorithmic management By Grohmann, Rafael; Pereira, Gabriel; Guerra, Ana; Abílio, Ludmila Costhek; Moreschi, Bruno; Jurno, Amanda
  11. Dimensionality reduction for prediction: Application to Bitcoin and Ethereum By Hugo Inzirillo; Benjamin Mat
  12. ‘If it’s not on Strava, it didn’t happen’ – Identifying user archetypes of sport-specific social media platforms based on motivation and behavior By Fabian Lensing
  13. Forging Links: Unblocking Transport with Blockchain? By ITF
  14. What is the Pulse of Businesses in a Digitalised Era? By Ionut-Alexandru Horhogea
  15. Monetary policy, Twitter and financial markets: evidence from social media traffic By Donato Masciandaro; Davide Romelli; Gaia Rubera
  16. Political polarization and the impact of internet and social media use in Brazil By Giuberti Coutinho, Lorena
  17. License to Heal : Understanding a Healthcare Platform Organization as a Multi-Level Surveillant Assemblage By Handan Vicdan; Mar Pérezts; A. Fuat Firat
  18. Online Appendix for: Two Illustrations of the Quantity Theory of Money Reloaded By Han Gao; Mariano Kulish; Juan Pablo Nicolini
  19. Short Film’s Global Role to Survey the Present and Influence the Future Tackling the Crucial Complications that Facing Humanity By Samah Nassar
  20. Applications of Signature Methods to Market Anomaly Detection By Erdinc Akyildirim; Matteo Gambara; Josef Teichmann; Syang Zhou
  21. Streams of digital data and competitive advantage: The mediation effects of process efficiency and product effectiveness By E. Raguseo; Pigni, F.; Claudio Vitari
  22. Payment Coordination and Liquidity Efficiency in the New Canadian Wholesale Payments System By Francisco Rivadeneyra; Nellie Zhang
  23. Uncovering the Source of Machine Bias By Xiyang Hu; Yan Huang; Beibei Li; Tian Lu
  24. The impact of noise and topology on opinion dynamics in social networks By Stern, Samuel; Livan, Giacomo
  25. Mechanisms of power inscription into IT governance: lessons from two national digital identity systems By Medaglia, Rony; Eaton, Ben; Hedman, Jonas; Whitley, Edgar A.
  26. Identifying and correcting bias in big crowd-sourced online genealogies By Michael Chong; Diego Alburez-Gutierrez; Emanuele Del Fava; Monica Alexander; Emilio Zagheni
  28. Social networks and agricultural performance: A multiplex analysis of interactions among Indian rice farmers By Konda, Bruhan; González‐Sauri, Mario; Cowan, Robin; Yashodha, Yashodha; Chellattan Veettil, Prakashan
  29. Endogenous multihoming and network effects: Playstation, Xbox, or both? By Foros, Øystein; Kind, Hans Jarle; Stähler, Frank
  30. Two-sided Search in International Markets By Jonathan Eaton; David Jinkins; James Tybout; Daniel Yi Xu

  1. By: Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: This study establishes economic growth needed for supply-side mobile money drivers in developing countries to be positively related to mobile money innovations in the perspectives of mobile money accounts, the mobile phone used to send money, and the mobile phone used to receive money. The empirical evidence is based on Tobit regressions. For the negative net relationships that are computed, minimum economic growth thresholds are established above which the net negative relationships become net positive relationships. The following minimum economic growth rates are required for nexuses between supply-side mobile money drivers and mobile money innovations to be positive: (i) 6.109% (6.193%) of GDP growth for mobile connectivity performance to be positively associated with the mobile phone used to send (receive) money and (ii) 4.590 % (4.259%) of GDP growth for mobile connectivity coverage to be positively associated with the mobile phone used to send (receive) money.
    Keywords: Mobile money; technology diffusion; financial inclusion; inclusive innovation
    JEL: D10 D14 D31 D60 O30
    Date: 2022–01
  2. By: Sonne, Lina (O.P. Jindal Global University, India and UNU-MERIT, Maastricht University)
    Abstract: This paper provides a snapshot of the way digitisation through mobile phones plays out among women in India. It is based on a review of literature, semi-structured interviews with 15 key stakeholders and 60 interviews with low-income women end-users across urban and rural locations in six states. The paper offers a snapshot of what women's access to, and use of phones looks like today in India. The interviews point to increased access to mobile phones with advanced features, with even women reporting to use basic phones being able to use applications such as WhatsApp. Our findings suggest that nearly all women have smartphones, have their own phone (rather than shared) and have a new phone (as opposed to a hand-me-down). Nevertheless, women remain constrained in the location and the type of use. Women primarily use the phone at home to avoid raising suspicion or gossip. A majority of respondents reported calling and receiving calls on a daily or weekly basis. When it came to messaging services, WhatsApp had overtaken conventional SMS. Women additionally use the phone for entertainment, for seeking out information, and for mobile payments. Very few women said their phones were monitored. Some respondents noted that they have serious concerns about the risk of harassment online, primarily through random calls. While women are able to operate their phones for every-day purposes, they struggle with adequate digital literacy when it comes to advanced features. There was little difference in the way women use their phones across rural-urban locations and across the six states.
    Keywords: Gender and technology, Inclusive digitisation, Mobile phone access, Digital economy, Digital society
    JEL: O33 O35 O17
    Date: 2021–08–30
  3. By: John Caramichael; Gordon Y. Liao
    Abstract: Stablecoins have experienced tremendous growth in the past year, serving as a possible breakthrough innovation in the future of payments. In this paper, we discuss the current use cases and growth opportunities of stablecoins, and we analyze the potential for stablecoins to broadly impact the banking system. The impact of stablecoin adoption on traditional banking and credit provision can vary depending on the sources of inflow and the composition of stablecoin reserves. Among the various scenarios, a two-tiered banking system can both support stablecoin issuance and maintain traditional forms of credit creation. In contrast, a narrow bank approach for digital currencies can lead to disintermediation of traditional banking, but may provide the most stable peg to fiat currencies. Additionally, dollar-pegged stablecoins backed by adequately safe and liquid collateral can potentially serve as a digital safe haven currency during periods of crypto market distress.
    Keywords: Stablecoins; Digital currencies; Credit intermediation; Banking; Systemic risk; Fintech; Financial innovation; Payment system
    JEL: E40 E50 F33 G10 G20 O30
    Date: 2022–01–31
  4. By: Pauline Affeldt; Reinhold Kesler
    Abstract: Since 2010, Google, Apple, Facebook, Amazon, and Microsoft (GAFAM) have acquired more than 400 companies. Competition authorities did not scrutinize most of these transactions and blocked none. This raised concerns that GAFAM acquisitions target potential competitors yet fly under the radar of current merger control due to the features of the digital economy. We empirically study the competitive effects of big tech acquisitions on competitors in a relevant online market. We identify acquisitions by GAFAM involving apps from 2015 to 2019, matching these to a comprehensive database covering apps available in the Google Play Store. We find that competing apps tend to innovate less following an acquisition by GAFAM, while there seems to be no impact on prices and privacy-sensitive permissions of competing apps. Additionally, we find evidence that affected developers reallocate innovation efforts to unaffected apps and that affected markets experience less entry post-acquisition.
    Keywords: Mergers and acquisitions, digital markets, GAFAM, apps, innovation, privacy, event study
    JEL: K21 L41 L86 G34
    Date: 2021
  5. By: Bogdan Radu (Dimitrie Cantemir Christian University, Bucharest, Romania)
    Abstract: This article aims at presenting the strengths and weaknesses of the Romanian legislation towards non-fungible tokens (NFTs). We start by recognizing that there is no active legislation that deals with cryptocurrency, NFTs or any other digital asset using a digital ledger of transactions (DLT). The starting point is the analysis of the legal characteristics of an NFT through the classical qualification and distinction made for goods by the Romanian Civil code. Further, we raise some issues regarding establishing a clear tax regime and the correlation between NFTs and intellectual property rights, and finally conclude that when it comes to qualifying crypto-assets, we need to adopt a ‘substance over form' approach, in order to avoid regulatory unpredictability.
    Keywords: Non-fungible tokens, NFT, cryptocurrency, DLT, blockchain
    Date: 2021–08
  6. By: Tetteh, Godsway Korku (UNU-MERIT, Maastricht University); Goedhuys, Micheline (UNU-MERIT, Maastricht University); Konte, Maty (UNU-MERIT, Maastricht University, and Barnard College, Columbia University); Mohnen, Pierre (UNU-MERIT, Maastricht University)
    Abstract: Despite the contribution of previous studies to unravel the implications of mobile money in the developing world, the effect of this innovation on an important source of external finance, trade credit, has not been properly accounted for particularly in the informal sector. Using the 2016 FinAccess Household Survey, we investigate the relationship between mobile money adoption and the probability to receive goods and services on credit from suppliers based on a sample of entrepreneurs who operate informal businesses. We further explore the effect of mobile money adoption on the likelihood to offer goods and services on credit to customers. Our estimations suggest that entrepreneurs with mobile money are more likely to receive goods and sesrvices on credit from suppliers. We also find a positive and significant relationship between mobile money adoption and the likelihood to offer goods and services on credit to customers. The evidence supports the promotion of mobile money adoption among entrepreneurs in the informal sector to facilitate access to credit.
    Keywords: Entrepreneurship, Financial Innovation, Mobile Money, Trade Credit
    JEL: D14 G21 L26 O16 O33
    Date: 2021–11–17
  7. By: Liu, Francis; Packham, Natalie; Lu, Meng-Jou; Härdle, Wolfgang
    Abstract: The introduction of derivatives on Bitcoin enables investors to hedge risk exposures in cryptocurrencies. Because of volatility swings and jumps in cryptocurrency prices, the traditional variance-based approach to obtain hedge ratios is infeasible. As a consequence, we consider two extensions of the traditional approach: first, different dependence structures are modelled by different copulae, such as the Gaussian, Student-t, Normal Inverse Gaussian and Archimedean copulae; second, different risk measures, such as value-at-risk, expected shortfall and spectral risk measures are employed to and the optimal hedge ratio. Extensive out-of-sample tests give insights in the practice of hedging various cryptos and crypto indices, including Bitcoin, Ethereum, Cardano, the CRIX index and a number of crypto-portfolios in the time period December 2017 until May 2021. Evidences show that BTC futures can effectively hedge BTC and BTC-involved indices. This promising result is consistent across different risk measures and copulae except for Frank. On the other hand, we observe complex and diverse dependence structures between BTC-not-involved assets and the futures. As a consequence, results of hedging other assets and indices are diverse and, in some occasions, not ideal.
    Keywords: Cryptocurrencies,risk management,hedging,copulas
    JEL: G11 G13
    Date: 2021
  8. By: Noskova, Victoriia
    Abstract: In December 2020, new regulation of digital markets was proposed by European Commission. It specifically addresses main concerns raised by business behavior of operators of core services in their gatekeeping positions. However, voice assistants (or digital personal assistants, DPAs, e.g. Apple's Siri, Amazon's Alexa, Google Assistant) are not included into this regulation. In contrast, the Internal Market and Consumer Protection Committee of European Parliament suggested to include them. This paper argues that (i) voice assistants as gatekeepers for consumption should be listed among core services, (ii) some Digital Market Act's obligations need to be adopted to fit specifics of voice assistants, (iii) two relevant dimensions of power should be included into rebuttable presumptions used for competition policy and regulation: market power on voice assistants' market and ecosystem of related markets (cross-market integration criterion), (iv) growth of new gatekeepers should be prevented, among other means by stricter merger control.
    Keywords: Voice Assistants,Gatekeepers,Digital Market Act,Digital Personal Assistants,Virtual Assistants,Competition in Digital Markets,Competitive Bottleneck,Information Intermediaries,Platform Competition,Smart Speakers,Siri,Alexa,Google Assistant
    JEL: K21 L1 L4 L86 O33 D4
    Date: 2021
  9. By: Hildenbrand, Hannah-Maria; von Rueden, Christina; Viete, Steffen
    Abstract: Online platforms have become one of the most important business models of the digital economy and likely counteracted some of the drop in economic activity during the COVID-19 pandemic. At the same time, platform markets are subject to controversial debates about market power and the need for pro-competitive policy reforms. Despite their rising importance in modern economies, however, a lack of data on platforms' activity complicates the evaluation of their impact on economies and societies. In this paper we aim to improve the understanding of patterns of platform diffusion and market dynamics among online platforms in Germany using proprietary data on website traffic between 2018 and 2021. Our analysis suggests that German platform markets experienced considerable growthover the past years, and especially since the onset of the COVID-19 pandemic. Results also show that the pandemic led to diverging growth patterns between sectors of the German platform economy, reflecting the sectoral heterogeneity of the COVID-19 shock. Finally, while German platforms are numerous, they often fail to reach a critical size to challenge the mostly foreign dominant platforms. We associate this finding with the observation that dominance in platform market typically persists over time, possibly reflecting a lack of market contestability.
    Date: 2021
  10. By: Grohmann, Rafael; Pereira, Gabriel (Aarhus University); Guerra, Ana; Abílio, Ludmila Costhek; Moreschi, Bruno; Jurno, Amanda
    Abstract: This article discusses how Brazilian platform workers experience and respond to platform scams through three case studies. Drawing from digital ethnographic research, vlogs/interviews of workers, and literature review, we argue for a conceptualization of “platform scam” that focuses on multiple forms of platform dishonesty and uncertainty. We characterize scam as a structuring element of the algorithmic management enacted by platform labor. The first case engages with when platforms scam workers by discussing Uber drivers’ experiences with the illusive surge pricing. The second case discusses when workers (have to) scam platforms by focusing on Amazon Mechanical Turk microworkers’ experiences with faking their identities. The third case presents when platforms lead workers to scam third parties, by engaging with how Brazilian click farm platforms’ workers use bots/fake accounts to engage with social media. Our focus on “platform scams” thus highlights the particular dimensions of faking, fraud, and deception operating in platform labor. This notion of platform scam expands and complexifies the understanding of scam within platform labor studies. Departing from workers' experiences, we engage with the asymmetries and unequal power relations present in the algorithmic management of labor.
    Date: 2021–10–07
  11. By: Hugo Inzirillo; Benjamin Mat
    Abstract: The objective of this paper is to assess the performances of dimensionality reduction techniques to establish a link between cryptocurrencies. We have focused our analysis on the two most traded cryptocurrencies: Bitcoin and Ethereum. To perform our analysis, we took log returns and added some covariates to build our data set. We first introduced the pearson correlation coefficient in order to have a preliminary assessment of the link between Bitcoin and Ethereum. We then reduced the dimension of our data set using canonical correlation analysis and principal component analysis. After performing an analysis of the links between Bitcoin and Ethereum with both statistical techniques, we measured their performance on forecasting Ethereum returns with Bitcoin s features.
    Date: 2021–12
  12. By: Fabian Lensing (University of Paderborn)
    Abstract: Sport-specific social media platforms such as Strava have become quite popular in recent times. Users can upload their exercise and competition activities, analyze them, share and compare them with fellow athletes, and even compete in virtual (or semi-virtual) challenges through such platforms. Anecdotal evidence suggests strong motivational and behavioral effects of using sport-specific social media. These effects, however, seem to differ across types of users. To identify different user groups and better understand the differences in their behavior and motivations, we conducted a survey among 557 recreational German triathletes. Apart from aspects characterizing platform usage and training activities, we collected socio-demographic information as well as data on personality traits and dispositions (i.e. the BIG 5). Based on these data, we identify four distinct clusters of sport-specific social media users: Casual Consumers, Lone Wolfs, Competitors, and Socializers. While the four types of users differ significantly with respect to motivation and behavior as well as usage frequency, they are not any different in terms of their personality traits. Findings are discussed and contextualized adopting a relational goods perspective.
    Keywords: Sport-specific Social Media, BIG 5 Personality Traits, Triathlon, Motivation, Behavior, Endurance Sports, Relational Goods
    JEL: Z20 L82 L83
    Date: 2022–02
  13. By: ITF
    Abstract: Blockchain and other distributed ledger technologies (DLTs) could help create trust and consensus in areas of the transport sector where they are needed for efficient solutions but currently often lacking. Such challenges concern for instance clearing transactions amongst multiple parties with divergent interests, authenticating provenance, managing assets, and auditability. This report explores how DLTs can address these issues by providing an alternative to centralised record-keeping and third-party audit-based approaches. It offers recommendations for maximising the benefits of DLTs in transport based on several use cases in freight and logistics as well as passenger transport.
    Date: 2021–02–26
  14. By: Ionut-Alexandru Horhogea (University of Birmingham, Birmingham, United Kingdom)
    Abstract: Previously, the laborers believing in an automatized business could have been considered dreamy, looking to skip daily tasks. Nowadays, the spectrum upon automatization and platforms facilitating e-commerce has changed and highlights the jump from a brick and mortar store to a virtual one. More and more established brands are replacing classic locations with logistic warehouses to deliver products more efficiently. Well-known companies, e.g., Zara, Amazon, eBay that have been recently founded, embraced this change and took the best out of it. However, our attention will fall on smaller businesses and the difficulties they face during such a transition and analyses from various standpoints the goods and the bads of each. Should the jump from a physical to an online facility be considered or left untouched? What is the best model to be followed in order to level a business? Let us find in the following.
    Keywords: digital business, physical store, evolution, management, marketing, logistics
    Date: 2021–08
  15. By: Donato Masciandaro; Davide Romelli; Gaia Rubera
    Abstract: How does central bank communication affect financial markets? This paper shows that the monetary policy announcements of three major central banks, i.e. the European Central Bank, the Federal Reserve and the Bank of England, trigger significant discussions on monetary policy on Twitter. Using machine learning techniques we identify Twitter messages related to monetary policy around the release of monetary policy decisions and we build a metric of the similarity between the policy announcement and Twitter traffic before and after the announcement. We interpret large changes in the similarity of tweets and announcements as a proxy for monetary policy surprise and show that market volatility spikes after the announcement whenever changes in similarity are high. These findings suggest that social media discussions on central bank communication are aligned with bond and stock market reactions.
    Keywords: monetary policy, central bank communication, financial markets, social media, Twitter, Federal Reserve, European Central Bank, Bank of England
    JEL: E44 E52 E58 G14 G15 G41
    Date: 2021
  16. By: Giuberti Coutinho, Lorena (UNU-MERIT, Maastricht)
    Abstract: Influential scholars have pointed to the Internet and social media as a reason for the recent political divide in many countries. Greater exposure to imbalanced information in these environments would reinforce previous political positions leading voters to develop more extreme positions or greater animosity towards candidates of the opposing political group, a phenomenon known as affective polarization. This study investigates the impact of Internet and social media use on Brazil's recent affective polarization, exploring the historical peculiarities in the layout of pre-existing infrastructure that causes exogenous variation in Internet and social media usage. There is no empirical evidence that access to this new media environment explains affective polarization within the population under this study. Findings are consistent with the strand of literature suggesting that the recent phenomena of political polarization in some countries cannot be attributed to Internet and social media use
    Keywords: political polarization, broadband internet, Brazil
    JEL: D12 D72 L82 L86
    Date: 2021–08–30
  17. By: Handan Vicdan (emlyon business school); Mar Pérezts; A. Fuat Firat
    Abstract: Platform organizations bring renewed attention to power disparities and risks in the rise of surveillance capitalism. However, such critical accounts provide a partial understanding of the complexity of surveillance phenomena in such shifting socio-technical and digital environments. Findings from a netnographic investigation of a healthcare platform organization, PatientsLikeMe, unravel how platforms become the locus where multi-level flows of surveillance converge, thereby constituting what we identify as a surveillant assemblage. We develop a comprehensive approach for understanding how platforms constitute a dynamic crossroads of micro, meso and macro surveillance phenomena within and beyond the online communities they create. Our study highlights this surveillant assemblage's emerging practices and potentially empowering outcomes that enable multi-stakeholder involvement in big data and knowledge generation in healthcare. Broader implications of multi-level surveillance in and through platforms are discussed.
    Keywords: Multi-level surveillance,surveillant assemblage,Platform organization,netnography,healthcare
    Date: 2021–12–15
  18. By: Han Gao; Mariano Kulish; Juan Pablo Nicolini
    Keywords: Monetary policy; Monetary aggregates; Money demand
    JEL: E41 E51 E52
    Date: 2021–12–17
  19. By: Samah Nassar (October University for Modern Sciences and Arts, Faculty of Arts and Design, Cairo, Egypt)
    Abstract: Digital technologies have revolutionized the normal practices in various industries. The short films industry has equally experienced innumerable changes since its first inception in 1910. The industry has seen changes ranging from noble changes from creative processes, ideas or script writing, and featuring and characterization. This paper sets out to assess the historical development of short films from the early 19th Century until the present age, and the future prospects in the film industry. With new ways of sharing the short films varying from social media platforms, direct media, theatres and live performances, filmmakers have multiple opportunities to craft and showcase their talents in short films. Besides, short films strongly influence society as they impact the audience’s future interactions and thinking patterns, especially using the themes or content relayed in the short films. Therefore, short films play a great role in shaping society’s morals and people’s behaviors. Recently, short films were explored to showcase the United Nations’ universal goals to promote social cohesion among the global population. The paper concludes by analyzing the challenges and future potential of the short films industry, especially educating and entertaining the masses.
    Keywords: short films, global awareness, UN SDG’s, future, humanity
    Date: 2021–06
  20. By: Erdinc Akyildirim; Matteo Gambara; Josef Teichmann; Syang Zhou
    Abstract: Anomaly detection is the process of identifying abnormal instances or events in data sets which deviate from the norm significantly. In this study, we propose a signatures based machine learning algorithm to detect rare or unexpected items in a given data set of time series type. We present applications of signature or randomized signature as feature extractors for anomaly detection algorithms; additionally we provide an easy, representation theoretic justification for the construction of randomized signatures. Our first application is based on synthetic data and aims at distinguishing between real and fake trajectories of stock prices, which are indistinguishable by visual inspection. We also show a real life application by using transaction data from the cryptocurrency market. In this case, we are able to identify pump and dump attempts organized on social networks with F1 scores up to 88% by means of our unsupervised learning algorithm, thus achieving results that are close to the state-of-the-art in the field based on supervised learning.
    Date: 2022–01
  21. By: E. Raguseo (DIGEP - Department of Management and Production Engineering [Politecnico di Torino] - Polito - Politecnico di Torino = Polytechnic of Turin); Pigni, F. (Grenoble Ecole de Management); Claudio Vitari (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon, AMU ECO - Aix-Marseille Université - Faculté d'économie et de gestion - AMU - Aix Marseille Université)
    Abstract: Firms can achieve a competitive advantage by leveraging real-time Digital Data Streams (DDSs). The ability to profit from DDSs is emerging as a critical competency for firms and a novel area for Information Technology (IT) investments. We examine the relationship between DDS readiness and competitive advantage by studying the mediation effect of product effectiveness and process efficiency. The research model is tested with data obtained from 302 companies, and the results confirm the existence of the mediation effects. Interestingly, we confirm that competitive advantage is more significantly impacted by IT investments affecting product effectiveness than those affecting process efficiency
    Keywords: Streams of big data,process efficiency,product effectiveness,competitive advantage
    Date: 2021
  22. By: Francisco Rivadeneyra; Nellie Zhang
    Abstract: A new wholesale payments system will launch in Canada in 2021. This real-time gross settlement system called Lynx will have two types of settlement mechanisms, one allowing offsetting and the other not. This paper studies the decision problem of the Bank of Canada: which of the two settlement mechanisms should it use to send its payments. Using extensive simulation, we show that, mainly due to the benefits of liquidity pooling, Lynx would achieve its highest liquidity efficiency—even better than that of the current Large Value Transfer System (LVTS)—if all payments (urgent and non-urgent) from all participants were sent to the mechanism allowing offsetting. The minimum amount of liquidity required to settle all payments by critical deadlines is approximately $10 billion, around half the amount of collateral that LVTS participants allocate (pre–COVID-19). Since time-critical payments sent to the offsetting mechanism could experience a delay, the high level of liquidity efficiency is accompanied by an increase in the number of participants' operational interventions (to pledge more collateral or to alter payment priorities) to ensure that those time-critical payments are never delayed. When coordination does not occur, liquidity efficiency can be far lower than in the LVTS. The results highlight that the Bank of Canada helping with coordination is more important than the specific choice of mechanism.
    Keywords: Payment clearing and settlement systems
    JEL: C C5 E42 E58
    Date: 2022–02
  23. By: Xiyang Hu; Yan Huang; Beibei Li; Tian Lu
    Abstract: We develop a structural econometric model to capture the decision dynamics of human evaluators on an online micro-lending platform, and estimate the model parameters using a real-world dataset. We find two types of biases in gender, preference-based bias and belief-based bias, are present in human evaluators' decisions. Both types of biases are in favor of female applicants. Through counterfactual simulations, we quantify the effect of gender bias on loan granting outcomes and the welfare of the company and the borrowers. Our results imply that both the existence of the preference-based bias and that of the belief-based bias reduce the company's profits. When the preference-based bias is removed, the company earns more profits. When the belief-based bias is removed, the company's profits also increase. Both increases result from raising the approval probability for borrowers, especially male borrowers, who eventually pay back loans. For borrowers, the elimination of either bias decreases the gender gap of the true positive rates in the credit risk evaluation. We also train machine learning algorithms on both the real-world data and the data from the counterfactual simulations. We compare the decisions made by those algorithms to see how evaluators' biases are inherited by the algorithms and reflected in machine-based decisions. We find that machine learning algorithms can mitigate both the preference-based bias and the belief-based bias.
    Date: 2022–01
  24. By: Stern, Samuel; Livan, Giacomo
    Abstract: We investigate the impact of noise and topology on opinion diversity in social networks. We do so by extending well-established models of opinion dynamics to a stochastic setting where agents are subject both to assimilative forces by their local social interactions, as well as to idiosyncratic factors preventing their population from reaching consensus. We model the latter to account for both scenarios where noise is entirely exogenous to peer influence and cases where it is instead endogenous, arising from the agents' desire to maintain some uniqueness in their opinions. We derive a general analytical expression for opinion diversity, which holds for any network and depends on the network's topology through its spectral properties alone. Using this expression, we find that opinion diversity decreases as communities and clusters are broken down. We test our predictions against data describing empirical influence networks between major news outlets and find that incorporating our measure in linear models for the sentiment expressed by such sources on a variety of topics yields a notable improvement in terms of explanatory power.
    Keywords: network science; opinion dynamics; social networks; PSRC Early Career Fellowship in Digital Economy (grant no. EP/ N006062/1
    JEL: C1
    Date: 2021–04–07
  25. By: Medaglia, Rony; Eaton, Ben; Hedman, Jonas; Whitley, Edgar A.
    Abstract: Establishing IT governance arrangements is a deeply political process, where relationships of power play a crucial role. While the importance of power relationships is widely acknowledged in IS literature, specific mechanisms whereby the consequences of power relationships affect IT governance arrangements are still under-researched. This study investigates the way power relationships are inscribed in the governance of digital identity systems in Denmark and the United Kingdom, where public and private actors are involved. Drawing on the theoretical lens of circuits of power, we contribute to research on the role of power in IT governance by identifying two distinct mechanisms of power inscription into IT governance: power cultivation and power limitation.
    Keywords: power; IT governance; digital identity; Denmark; United Kingdom
    JEL: R14 J01
    Date: 2021–02–02
  26. By: Michael Chong; Diego Alburez-Gutierrez (Max Planck Institute for Demographic Research, Rostock, Germany); Emanuele Del Fava (Max Planck Institute for Demographic Research, Rostock, Germany); Monica Alexander (Max Planck Institute for Demographic Research, Rostock, Germany); Emilio Zagheni (Max Planck Institute for Demographic Research, Rostock, Germany)
    Keywords: Alabama, Denmark, Finland, France, Norway, Sweden, USA, bias, genealogy, mortality, statistics
    JEL: J1 Z0
    Date: 2022
  27. By: Luca Panzone (School of Natural and Environmental Science, Newcastle University; The Alan Turing Institute); Natasha Auch (The Alan Turing Institute); Daniel Zizzo (School of Economics, University of Queensland, Brisbane, Australia)
    Abstract: We use an incentive-compatible experimental online supermarket to test the role of commitment and badges in reducing the carbon footprint of grocery shopping. In the experiment, some participants had the opportunity to voluntarily commit to a low carbon footprint basket before their online grocery shopping; while the commitment was forced upon other participants. We also study the impact of an online badge as a soft reward for the achievement of a low carbon footprint basket. Participants from the general population shopped over two weeks, with the experimental stimuli only in week 2; and received their shopping baskets and any unspent budget. Results indicate that requesting a commitment prior to entering the store leads to a reduction in carbon footprint of 8-9%. The online badge led to non-significant reductions in carbon footprint. Commitment mechanisms, either forced or voluntary, appear effective in motivating an environmental goal and search for low-carbon options, particularly in those accepting the commitment.
    Keywords: sustainable consumption, commitment, field experiment, carbon footprint, food consumption.
    JEL: C54 C93 D12 D91 Q18 Q56
    Date: 2022–01–16
  28. By: Konda, Bruhan (UNU-MERIT, Maastricht University); González‐Sauri, Mario (UNU-MERIT, Maastricht University); Cowan, Robin (UNU-MERIT, Maastricht University); Yashodha, Yashodha (International Rice Research Institute (IRRI), India); Chellattan Veettil, Prakashan (International Rice Research Institute (IRRI), India)
    Abstract: Most network studies in agriculture examine uni-dimensional connections between individuals to understand the effect of social networks on outcomes. However, in most real-world scenarios, network members' exchanges happen through multiple relationships and not accounting for such multi-dimensional interconnections may lead to biased estimate of social network effects. This study aims to unravel the consequences of not accounting such multidimensional networks by investigating the individual and joint effects of multiple connections (relationships) that exist among households on agricultural output. We use census data from three villages of Odisha, India that enables us to account for three types of relationships viz. information networks (knowledge sharing), credit networks (resource sharing) and friendship (social bonding) between households. We estimate the social network effect by combining both econometric (IV regression) and network (directed networks) techniques to address the problems of endogeneity. The joint effect of multiple networks is estimated using the multiplex network framework. We find that information flows are crucial to improve agricultural output when networks are accounted individually. However, the joint effect of all three networks using multiplex shows a significantly positive influence, indicating complementarity across relationships. In addition, we found evidence for the mediating role of interpersonal relationships (friendship network) in enhancing gains from the information flow.
    Keywords: Agriculture production, Social network, Multiplex networks, knowledge sharing, Resource sharing, Friendship
    JEL: C26 D83 O13 Q12
    Date: 2021–07–21
  29. By: Foros, Øystein (Dept. of Economics, Norwegian School of Economics and Business Administration); Kind, Hans Jarle (Dept. of Economics, Norwegian School of Economics and Business Administration); Stähler, Frank (University of Tübingen)
    Abstract: Competition between firms that sell incompatible varieties of network products might be fierce, because it is important for each of them to attract a large number of users. The literature therefore predicts that stronger network effects decrease prices and profits. We show that this prediction hinges critically on an implicit or explicit assumption that each consumer buys only one of the varieties offered in the market (singlehoming consumers). We show that multihoming (some consumers buy more than one variety) may arise endogenously if the number of exclusive features that each variety offers is sufficiently high. In sharp contrast to the conventional prediction under consumer singlehoming, we further show that both prices and profits could increase in the strength of the network effects if (some) consumers multihome. However, this does not necessarily imply that profits are higher under multihoming than under singlehoming. On the contrary, multihoming might constitute a prisoner s dilemma for the firms, in the sense that they could make higher profits if each consumer bought only one of the varieties.
    Keywords: multihoming; incremental pricing; network effects.
    JEL: L13 L14 L82
    Date: 2022–02–06
  30. By: Jonathan Eaton; David Jinkins; James Tybout; Daniel Yi Xu
    Abstract: We develop a dynamic model of international business-to-business transactions in which sellers and buyers search for each other, with the probability of a match depending on both individual and aggregate search effort. Fit to customs records on U.S. apparel imports, the model captures key cross-sectional and dynamic features of international buyer-seller relationships. We use the model to make several quantitative inferences. First, we calculate the search costs borne by heterogeneous importers and exporters. Second, we provide a structural interpretation for the life cycles of importers and exporters as they endogenously acquire and lose foreign business partners. Third, we pursue counterfactuals that approximate the phaseout of the Agreement on Textiles and Clothing (the “China shock") and the IT revolution. Lower search costs can significantly improve consumer welfare, but at the expense of importer pro ts. On the other hand, an increase in the population of foreign exporters can congest matching to the extent of dampening or even reversing the gains consumers enjoy from access to extra varieties and more retailers.
    Date: 2022–01

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