nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2022‒02‒28
thirty-six papers chosen by

  1. Falling Use of Cash and Demand for Retail Central Bank Digital Currency By Mr. Tanai Khiaonarong; David Humphrey
  2. Is Better Access to Mobile Networks Associated with Increased Mobile Money Adoption? Evidence from the Micro-data of Six Developing Countries By Hisahiro Naito; Shinnosuke Yamamoto
  3. Central Bank Digital Currency: What Basis Should be Taken for Crypto Assets? By PINSHI, Christian P.
  4. This Is What's in Your Wallet...and Here's How You Use It By Tamás Briglevics; Scott Schuh
  5. Servicios Financieros Digitales en Colombia: Una caracterización y análisis de riesgos potenciales By José Bran-Guevara; Luisa Fernanda Hernández-Ávila; Daniela McAllister-Harker
  6. Applications of cloud computing in modern marketing By Abid, Hofa
  7. Does financial innovation enhance financial deepening and growth in Kenya? By Misati, Roseline Nyakerario; Osoro, Jared; Odongo, Maureen
  8. Is a Secondary Currency Essential? – On the Welfare Effects of a New Currency By Max Fuchs; Jochen Michaelis
  9. E-commerce During Covid: Stylized Facts from 47 Economies By Ms. Prachi Mishra; Alberto Cavallo; Mr. Antonio Spilimbergo
  10. Digitale Speditionen in der Lebensmittellogistik By Michel, Viktor; Siegfried, Patrick
  11. Security Considerations for a Central Bank Digital Currency By Katya Delak; Tarik Hansen
  12. Using Distributed Ledger Technology for Payment Directories By Peter Lone; Kumar Nagarajan; Trish Supples; Paul Wong
  13. A Lawyer's Perspective on U.S. Payment System Evolution and Money in the Digital Age By Jess Cheng; Joseph Torregrossa
  14. E-commerce During Covid: Stylized Facts from 47 Economies By Joel Alcedo; Alberto Cavallo; Bricklin Dwyer; Prachi Mishra; Antonio Spilimbergo
  15. A Model of Cryptocurrencies By Michael Sockin; Wei Xiong
  16. 'As one dies, so dies the other' ? On local complementary currencies as two-sided platforms By Jean-Baptiste Desquilbet; Etienne Farvaque
  17. In platforms we trust: misinformation on social networks in the presence of social mistrust By Charlson, G.
  18. Forecasting Returns of Major Cryptocurrencies: Evidence from Regime-Switching Factor Models By Elie Bouri; Christina Christou; Rangan Gupta
  19. Cryptocurrencies, Diversification and the COVID-19 Pandemic By Allen, David
  20. Should Governments Tax Digital Financial Services? A Research Agenda to Understand Sector-Specific Taxes on DFS By Munoz, Laura; Mascagni, Giulia; Prichard, Wilson; Santoro, Fabrizio
  21. A blockchain application to the management of local complementary currencies By Sothearath Seang; Dominique Torre
  22. Digitalisation in Italy: evidence from a new regional index By Andrea Benecchi; Carlo Bottoni; Emanuela Ciapanna; Annalisa Frigo; Aldo Milan; Elisa Scarinzi
  23. Social media, polarization and democracy: A multi-methods analysis of polarized users' interactions on Reddit's r/WallStreetBets By Massoc, Elsa; Lubda, Maximilian
  24. Does going cashless make you tax-rich? Evidence from India’s demonetization experiment By Das, S; Gadenne, L; Nandi, T; Warwick, R
  25. The Imperialism of International Currency By Rahman, Abdurrahman Arum
  26. "E-inclusion: How digital contribute to include stigmatized customers– The case of modest and plus-size fashion" By Nawel Fellah-Dehiri; Béatrice Tachet Toureng
  27. Making Money By Gary B. Gorton; Chase P. Ross; Sharon Y. Ross
  28. Revolving versus Convenience Use of Credit Cards: Evidence from U.S. Credit Bureau Data By Scott L. Fulford; Scott Schuh
  29. Profitable Strategy Design by Using Deep Reinforcement Learning for Trades on Cryptocurrency Markets By Mohsen Asgari; Seyed Hossein Khasteh
  30. Addressing the Sustainability of Distributed Ledger Technology By Carlo Gola; Johannes Sedlmeir
  31. Dynamics of Bitcoin mining By Nemo Semret
  32. Fifty shades of hatred and discontent: Varieties of anti-finance discourses on the European Twitter (France, Germany, Italy, Spain and the UK) By Massoc, Elsa Clara
  33. The Challenges of Adapting Trade Policies to the Digital Era By Lee, Kyu Yub; Choi, Won Seok; Park, Ji Hyun; Eom, Jun-Hyun; Kang, Min Ji; Whang, Unjung
  34. Two-Sided Search in International Markets By Jonathan Eaton; David Jinkins; James R. Tybout; Daniel Xu
  35. Credit Cards, Credit Utilization, and Consumption By Scott Fulford; Scott Schuh
  36. Lessons from the Early Establishment of Banking Supervision in Italy (1926-1936) By Dario Pellegrino; Marco Molteni

  1. By: Mr. Tanai Khiaonarong; David Humphrey
    Abstract: Cash use in most countries is falling slowly. On the margin, younger adults favor cash substitutes over cash. For older adults it is the reverse. Revealed preference tied to a changing population age structure seems to be the main influence on the demand for cash and why it is falling. Cash use may continue to fall, and card use (the main cash substitute) may fall by more, if CBDC is issued. The extent of this reduction depends on the demand for retail CBDC and the incentives (primarily transaction fees) that can play a determining role in CBDC adoption and use.
    Keywords: Cash, card payments, payment substitution, central bank digital currency
    Date: 2022–02–04
  2. By: Hisahiro Naito; Shinnosuke Yamamoto
    Abstract: In several developing countries in Sub-Saharan Africa, accessibility to digital financial services is increasing because of the development of mobile money services. People previously excluded from the financial system have started to have access to financial services such as receiving and sending remittances, saving, and borrowing. This study examines the effect of network accessibility on the use of mobile money in six developing countries (Bangladesh, Kenya, Nigeria, Pakistan, Tanzania, and Uganda) using GPS information on each household and mobile phone network coverage maps. We find that among these six countries, network accessibility is associated with the use of mobile money in a robust way only in Pakistan and Tanzania. In those two countries, when a household location becomes 10 km closer to the center of the area with multiple mobile networks, the probability of using mobile money increases by 10 percent. In the other countries, we did not find a robust relationship between the use of mobile money and network accessibility. This suggests that increasing network accessibility may not be an efficient method for increasing mobile money adoption in certain countries. The fact that mobile money use rates differ between Tanzania and Pakistan also suggests that the effect of mobile networks is unrelated to the overall level of mobile money adoption.
    Date: 2022–01
  3. By: PINSHI, Christian P.
    Abstract: This note sparks a debate and a state of play in the age of the digital revolution, on the adoption of central bank digital currencies (CBDCs) for central banks.
    Keywords: central bank digital currencies
    JEL: E58
    Date: 2022–01
  4. By: Tamás Briglevics (Magyar Nemzeti Bank); Scott Schuh (West Virginia University)
    Abstract: Consumer wallets have more means of payment yet cash still is used most. We develop a dynamic structural model blending cash inventory management and payment instrument choice. For each expenditure, consumers endogenously pay with cash, debit card, or credit card with an option to withdraw cash beforehand. The model is estimated with transaction-level data from a daily consumer payment diary and reveals that utility from payment services exceed cash management costs. For payment card owners, optimal cash holdings are about $50 and jointly determined with the share of cash payments. Eliminating either cash or payment cards reduces consumer welfare significantly.
    Keywords: Money demand, cash inventory management, payment demand, debit cards, credit cards, structural estimation, discrete-continuous choice, Diary of Consumer, Payment Choice
    JEL: E41 E42 D12 D14
    Date: 2020–04
  5. By: José Bran-Guevara; Luisa Fernanda Hernández-Ávila; Daniela McAllister-Harker
    Abstract: Este documento presenta un análisis de los avances en servicios de crédito y pagos digitales en Colombia, con énfasis en sus características y riesgos potenciales que enfrentan los usuarios, oferentes de servicios y la banca central. Para cumplir con este propósito se llevaron a cabo consultas y simulaciones de solicitud de servicios en sitios web de algunos oferentes destacados. Entre sus características destaca la existencia de costos para los usuarios que pueden limitar su aceptación y uso. En relación a los riesgos potenciales, es posible reconocer algunos presentes en los servicios financieros tradicionales, como los asociados a la solvencia de los captadores de dinero, el crecimiento del crédito, el riesgo de no pago y el sobreendeudamiento de los hogares; mientras que otros son propios de los servicios digitales, como el fraude electrónico o la participación de actores no regulados en la oferta de servicios financieros, lo que podría afectar la estabilidad financiera y la efectividad de la política monetaria del banco central. Finalmente, el documento resalta la posición actual de la regulación financiera en Colombia frente a la promoción de servicios financieros digitales y algunas medidas que pueden apoyar esta labor y la mitigación de riesgos. Entre otras, son importantes la promoción de la educación económica, financiera y tecnológica, y la actualización de la regulación de los sistemas de pago de bajo valor en el país. **** ABSTRACT: This document analyses recent developments in digital credit and payments platforms in Colombia. It explores digital financial services characteristics, and the potential risks faced by users, providers, and the central bank. We compiled information obtained by simulated products requests on some digital financial services providers' websites. identify We Identified the presence of costs associated with the use of financial digital services, which can constrain users' acceptance and further expansion of these types of services. Furthermore, we recognized intrinsic risks associated with digital services such as electronic fraud and the emergence of unregulated institutions in the financial system, which could impact financial stability and the effectiveness of the monetary policy. Finally, the document presents how digital financial services are promoted in Colombia and some recommendations to financial authorities to foster its usage and mitigate risks. Some of those measures are related to the promotion of economic, financial, and technological education programs and the update of the low-value payment systems regulation.
    Keywords: Crédito digital, pagos digitales, servicios financieros, regulación financiera, digital credit, digital payments, financial services, financial regulation
    JEL: E42 E58 G28 G21
    Date: 2022–02
  6. By: Abid, Hofa (Bt research scoiety)
    Abstract: Many cloud-based marketing programs, ranging from CRM systems to marketing automation solutions, are already widely used. These services let marketers monitor campaigns and activities across mobile, social, and Web platforms, as well as customer interactions. As Internet usage has spread across devices, there are more ways to engage potential consumers in this modern era - but it is also more challenging to attract their attention. Customers desire stuff that is unique, organic, engaging, and personalized. Marketers may employ cloud technology to generate new data-driven strategies and more tailored and targeted marketing. These tools will very definitely be combined with one of the digital marketing components listed below.
    Date: 2020–08–11
  7. By: Misati, Roseline Nyakerario; Osoro, Jared; Odongo, Maureen
    Abstract: This study examined the implication of financial innovation on financial depth and economic growth in Kenya using quarterly data covering the period 2009 to 2020. Based on autoregressive distributive lag models, we demonstrate a positive relationship between financial innovation and financial depth with the strongest impact emanating from internet usage and mobile financial services and the lowest impact from the number of bank branches and automated teller machines. The results also further reveal a significant positive impact of financial depth on economic growth consistent with the supply-leading finance theory. The study recommends investment in technology-enabling infrastructure for digital financial services, design strategies to ensure affordability of mobile devices and prioritisation of financial literacy to bridge the gap between people and technology.
    Keywords: Financial Innovation,Financial Depth,Growth
    Date: 2021
  8. By: Max Fuchs (University of Kassel); Jochen Michaelis (University of Kassel)
    Abstract: The coexistence of cash and digital currencies constitutes a system of parallel currencies. This paper tackles the question whether a new (digital) currency is essential: Does a new currency allow for a better resource allocation even if a fully accepted currency is in circulation and still remains in circulation? Using the dual currency search model of Kiyotaki and Wright (1993), we show how the introduction of a secondary currency affects average utility. There is some scope for a welfare improvement, the welfare effect depends on differences in returns and costs, and, in particular, the fraction of cash traders who will be replaced by digital money traders.
    Keywords: digital money, dual currency regime, welfare comparison
    JEL: E41 E42 E51
    Date: 2022
  9. By: Ms. Prachi Mishra; Alberto Cavallo; Mr. Antonio Spilimbergo
    Abstract: We study e-commerce across 47 economies and 26 industries during the COVID-19 pandemic using aggregated and anonymized transaction-level data from Mastercard, scaled to represent total consumer spending. The share of online transactions in total consumption increased more in economies with higher pre-pandemic e-commerce shares, exacerbating the digital divide across economies. Overall, the latest data suggest that these spikes in online spending shares are dissipating at the aggregate level, though there is variation across industries. In particular, the share of online spending in professional services and recreation has fallen below its pre-pandemic trend, but we observe a longer-lasting shift to digital in retail and restaurants.
    Keywords: COVID-19, Technological Change, consumption, digitalization; e-commerce
    Date: 2022–01–28
  10. By: Michel, Viktor; Siegfried, Patrick
    Abstract: Digital freight forwarders are flooding the logistics market with disruptive business models" says a blog post by the German Logistics Association. This statement indicates that as part of the digital transformation, the traditional and established forwarding business is being changed by new business models and the rules of the game in the industry are being redefined. These business models use machine learning technology in order to be able to better forecast the flow of goods or prices in advance. In theory, this makes it possible to plan better utilization of the vehicles and promote the transparency of transport prices. [Schi18] Whether these business models will completely "disrupt" the future of the forwarding industry or is just a current trend cannot be determined at the moment. A company that describes itself as a "digital freight forwarder" is subject to the same legal rights and obligations as defined in the Commercial Code (§454) for traditional freight forwarders (in short: procurement of shipments). Nevertheless, the process of digital forwarding differs from traditional forwarding. The business process of a digital freight forwarder essentially corresponds in its function to that of the freight exchange. This means that a digital freight forwarder offers a digital platform in which shippers and carriers are brought together as required. In contrast to the freight exchange, however, the prices between the load and the means of transport are not negotiated with each other but are assigned by an algorithm. The second difference to the freight exchange and at the same time a decisive factor for identification as a freight forwarder is that digital freight forwarders act as fixed-cost freight forwarders on the Internet and thus appear as contractual partners between shippers and carriers "at the click of a mouse".
    Keywords: Digital freight forwarding, food logistics, transport logistics
    JEL: L6 R4
    Date: 2021–02–02
  11. By: Katya Delak; Tarik Hansen
    Abstract: The concept of a central bank digital currency (CBDC) has gained traction in recent years, with an increasing number of central banks announcing efforts to explore CBDC use cases and designs. Institutions are in various stages of research and development, with some just beginning their research and others already entering pilot testing or even production, albeit on a limited scale.
    Date: 2022–02–03
  12. By: Peter Lone; Kumar Nagarajan; Trish Supples; Paul Wong
    Abstract: Although distributed ledgers frequently are viewed as a revolutionary technology that could transform many markets, the technology has not yet received wide-scale business adoption. This may be due in part to a lack of use cases for which the decentralized and distributed features of distributed ledger technology (DLT) are optimal. But payment directories (known in certain markets as registries), which facilitate the lookup of payments-related information, may be a use case that has specific challenges that take better advantage of these features than other use cases explored by businesses to date. Directories that support routing of information to support payments like aliases for peer-to-peer payments and business-to-business e-invoices may benefit from the use of DLT. DLT allows market participants to maintain and to protect localized information without the competitive, operational, and technical challenges of a centralized database.
    Date: 2022–02–03
  13. By: Jess Cheng; Joseph Torregrossa
    Abstract: Take a close look at something that is widely used by the general public as "money"—a Federal Reserve note, a deposit with a bank, a balance with a nonbank payment company (such as PayPal or Venmo), or perhaps even a cryptocurrency—and ask what it means to use it as a store of value and a medium of exchange. That question is, in essence, a legal one.
    Date: 2022–02–04
  14. By: Joel Alcedo; Alberto Cavallo; Bricklin Dwyer; Prachi Mishra; Antonio Spilimbergo
    Abstract: We study e-commerce across 47 economies and 26 industries during the COVID-19 pandemic using aggregated and anonymized transaction-level data from Mastercard, scaled to represent total consumer spending. The share of online transactions in total consumption increased more in economies with higher pre-pandemic e-commerce shares, exacerbating the digital divide across economies. Overall, the latest data suggest that these spikes in online spending shares are dissipating at the aggregate level, though there is variation across industries. In particular, the share of online spending in professional services and recreation has fallen below its pre-pandemic trend, but we observe a longer-lasting shift to digital in retail and restaurants.
    JEL: E2 F00 L81 O3
    Date: 2022–02
  15. By: Michael Sockin (University of Texas, Austin); Wei Xiong (Princeton University)
    Abstract: This paper develops a model to examine decentralization of online platforms through tokenization as an innovation to resolve the conflict between platforms and users. By delegating control to a collection of preprogrammed smart contracts, tokenization creates commitment devices that prevent a platform from abusing its users. This commitment comes at the cost of not having an owner with an equity stake who, in conventional platforms, would subsidize user participation to maximize the platform’s network effect. This trade-off makes utility tokens a more appealing funding scheme than equity for platforms with weak fundamentals. Our analysis further highlights that token prices are determined by the marginal user’s convenience yield, in contrast to equity, whose payoff is determined by the average user.
    Keywords: Cryptocurrencies
    JEL: G19
    Date: 2021–01
  16. By: Jean-Baptiste Desquilbet (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique); Etienne Farvaque (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Are local complementary currencies doomed? We analyse the conditions underlying the existence of these alternative monetary arrangements from the perspective of the two-sided platform theory. Considering their benefits to depend on the cross-externality generated by the presence of buyers and sellers using the alternative means of payment, we show that the possibility of the sustainability of such arrangements is weak. The result is established in a very general setting and with few restrictions on the parameters. Except in the presence of subsidies, the odds are low for local complementary currencies to survive.
    Keywords: Community currency,Complementary currency,Local exchange systems,Two-sided platforms,Means of payment JEL Classification: D42,E41,E42,E59,L11
    Date: 2022–01–10
  17. By: Charlson, G.
    Abstract: We examine the effect social mistrust has on the propagation of misinformation on a social network. Agents communicate with each other and observe information sources, changing their opinion with some probability determined by their social trust, which can be low or high. Low social trust agents are less likely to be convinced out of their opinion by their peers and, in line with recent empirical literature, are more likely to observe misinformative information sources. A platform facilitates the creation of a homophilic network where users are more likely to connect with agents of the same level of social trust and the same social characteristics. Networks in which worldview is relatively important in determining network structure have more pronounced echo chambers, reducing the extent to which high and low social trust agents interact. Due to the asymmetric nature of these interactions, echo chambers then decrease the probability that agents believe misinformation. At the same time, they increase polarisation, as disagreeing agents interact less frequently, leading to a trade-off which has implications for the optimal intervention of a platform wishing to reduce misinformation. We characterise this intervention by delineating the most effective change in the platform's algorithm, which for peer-to-peer connections involves reducing the extent to which relatively isolated high and low social trust agents interact with one another.
    Keywords: communication, misinformation, network design, platforms
    JEL: D82 D83 D85
    Date: 2022–01–14
  18. By: Elie Bouri (School of Business, Lebanese American University, Lebanon); Christina Christou (School of Economics and Management, Open University of Cyprus, 2252, Latsia, Cyprus); Rangan Gupta (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa)
    Abstract: The returns of cryptocurrencies tend to co-move, with their degree of co-movement being contingent on the (bullish- or bearish-) states. Given this, we use standard factor models and regime-switching factor loadings to forecast the returns of a specific cryptocurrency based on its lagged information and informational contents of 14 other cryptocurrencies, with these 15 together constituting 65% of the market capitalization. Considering top five cryptocurrencies namely, Bitcoin, Ethereum, Ripple, Dogecoin, and Litecoin, we find significant forecastability and evidence that factor models, in general, outperform the benchmark random-walk model, with the regime-switching versions standing out in the majority of the cases.
    Keywords: Cryptocurrencies, Factor Model, Markov-switching, Forecasting
    JEL: C22 C53 G15
    Date: 2022–02
  19. By: Allen, David
    Abstract: The paper features an analysis of cryptocurrencies and the impact of the COVID- 19 pandemic on their effectiveness as a portfolio diversification tool. It does so by exploring the correlations between the continuously compounded returns on Bitcoin, Ethereum and the S&P500 Index, using a variety of parametric and non-parametric techniques. These methods include linear standard metrics such as the application of ordinary least squares regression (OLS) and the Pearson, Spearman, and Kendall's tau measures of association. In addition, nonlinear, non-parametric measures such as the Generalised Measure of Correlation (GMC), and non-parametric copula estimates are applied. The results across this range of measures are consistent. The metrics suggest that whilst the shock of the COVID-18 pandemic does not appear to have increased the correlations between the crypto currency series, it does appear to have increased the correlations between the returns on crypto currencies and those on the S&P500 Index. This suggests that investment in cryptocurrencies is not likely to offer key diversification strategies in times of crisis, on the basis of evidence provided by this crisis
    Keywords: Bitcoin, Ethereum, Copula, kernel estimation, non-parametric, GMC
    JEL: C19 C65 G01 G11
    Date: 2021–12–31
  20. By: Munoz, Laura; Mascagni, Giulia; Prichard, Wilson; Santoro, Fabrizio
    Abstract: Digital financial services (DFS) have rapidly expanded across Africa and other low-income countries. At the same time, low-income countries face strong pressures to increase domestic resource mobilisation, and major challenges in taxing the digital economy. A growing number are therefore advancing or considering new taxes on DFS. These have generated much debate and there are significant disagreements over the rationale for the taxes and their likely impacts. This paper examines three key questions that could help governments and other stakeholders to better understand the rationale for, and impacts of, different decisions around taxing DFS – and to arrive at policies that best meet competing needs. First, what is the rationale for imposing specific taxes on money transfers or mobile money in particular? Second, and most importantly, what is the likely impact of DFS taxes? Third, how do the policy processes through which taxes on DFS and money transfers are introduced function in practice? The paper looks at the core principles of good taxation and presents the existing debate around whether taxes on DFS observe them. It explains why understanding the landscape of financial services is essential to designing suitable tax policies and lays out a framework for developing the necessary analysis of the impacts of taxes on DFS. It also highlights the importance of better understanding the processes that give rise to these taxes.
    Keywords: Governance,
    Date: 2022
  21. By: Sothearath Seang (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (... - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015-2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur); Dominique Torre (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (... - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015-2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur)
    Abstract: This paper proposes a theoretical setting to analyze the possibility of implementing a blockchain governance to local complementary currencies. The local currency that we capture is used to promote objectives such as short distribution channels, high quality products, and sustainable behaviors at the local level. Its viability relies on the ability of shops to support their involvement in the advantages derived from the use of the currency, on the interest of consumers in said advantages, and on the cost of the governance method used. The blockchain solution appears to be suitable in this specific setting that requires a substantial level of security and reproducibility. The model includes a control by the issuer or administrator of the currency of the advantages perceived by heterogeneous consumers. It also integrates the specifications of the blockchain (rewards of miners in a Proof-of-Work protocol, number of transactions per block) and their cost for the collectivity. Analytical results evaluate the conditions of sustainability of the system and numerical simulations from the model illustrate the diverse specifications of the trade-offs between the costs and advantages of such system for the population.
    Keywords: payment system,heterogeneous agents,digitization,community currency
    Date: 2021–12
  22. By: Andrea Benecchi (Bank of Italy); Carlo Bottoni (Bank of Italy); Emanuela Ciapanna (Bank of Italy); Annalisa Frigo (Bank of Italy); Aldo Milan (AGCOM); Elisa Scarinzi (Bank of Italy)
    Abstract: The geographic digital divide has a significant, though largely unexplored, dimension within a country. This paper proposes an index of digital development for the Italian NUTS2 regions (rDESI) based on the European Commission’s Digital Economy and Society Index (DESI). The rDESI monitors the regional digital divide across five dimensions: (i) the infrastructure and the network usage (connectivity), (ii) the population’s digital skills, (iii) the use of internet services by households, (iv) the integration of ICT by firms, and (v) the level of digital services offered by local government. Southern regions tend to lag behind in most of these dimensions, even if infrastructures and the quality of connectivity appears quite homogeneous across the country. In the last part of the paper, we highlight the limitations of the DESI methodology, proposing some improvements.
    Keywords: digitalization, connectivitym DESI, regional divergence
    JEL: C43 C80 L96 R10
    Date: 2021–12
  23. By: Massoc, Elsa; Lubda, Maximilian
    Abstract: In times of increased political polarization, the continuing existence of a deliberative arena where people with antagonistic views may engage with each other in non-violent ways is critical for democracy to live on. Social media are usually not conceived as such arenas. On the contrary, there has been widespread worry about their role in increasing polarization and political violence. This paper suggests a more positive impact of social media on democracy. Our analysis focuses on the subreddit "r/WallStreetBets" (r/WSB) - a finance-related forum that came under the spotlight when its users coordinated a financial attack on hedge funds during the Gamestop saga in early 2021. Based on an original method attributing partisanship scores to users, we present a network analysis of interactions between users at the opposite sides of the political spectrum on r/WSB. We then develop a content analysis of politically relevant threads in which polarized users participate. Our analyses show that r/WSB provides a rare space where users with antagonistic political leanings engage with each other, debate, and even cooperate.
    Keywords: social media,polarization,democracy,investment forum,social media,polarization,democracy,investment forum
    Date: 2022
  24. By: Das, S (Reserve Bank of India); Gadenne, L (University of Warwick, Institute for Fiscal Studies and CEPR); Nandi, T (Indian Institute of Science Education and Research (IISER), Kolkata); Warwick, R (Institute for Fiscal Studies)
    Abstract: This paper investigates the effect of electronic payments technology on firms’ tax compliance in a large developing economy. We consider India’s demonetization policy which, by limiting the availability of cash, led to a large increase in the use of electronic forms of payments. Using administrative data on firms’ tax returns and variation in the strength of the demonetization shock across local areas, we find that greater use of electronic payments leads to firms reporting more sales to the tax authorities. This effect is strong enough to explain roughly half of the large (11%) increase in reported sales observed during demonetization.
    Keywords: tax compliance, electronic payments, demonetization JEL Classification:H26, O23, H25
    Date: 2022
  25. By: Rahman, Abdurrahman Arum
    Abstract: Our international monetary system is neither symmetrical nor democratic. Some countries create international payment instruments while others buy them. This gives rise to imperialism. Countries that create international money can benefit at the cost of the world. Countries in the world give up resources and wealth to countries that own international currencies from hundreds of billions of dollars to trillions every year for free. Countries that own international currencies create and regulate the international monetary system for their domestic interests, not for the world's interests. The current international currency system is the greatest empire of the modern age.
    Keywords: International monetary system, money empire, exploitation, dollar, euro,
    JEL: A1 B5 F0
    Date: 2022–01–14
  26. By: Nawel Fellah-Dehiri (IAE Paris - Sorbonne Business School); Béatrice Tachet Toureng (IPAG Business School)
    Abstract: The aim of this research is to understand the fashion market and particularly the issues that may encourage or hinder marketing practitioners to offer specific collections towards stigmatized consumers such as Muslim women or overweight women. Using interviews with managers, point-of-sale observations and secondary data collection, we show that managers face many barriers in this stigmatized market and how they try to bypass them through adjusted strategies. We introduce the digital marketing strategy of "E-inclusion" which consists of offering specific products online to stigmatized consumers, in order to reduce their feeling about lack of inclusion.
    Abstract: L'objectif de la présente recherche est de comprendre le marché de la mode, en particulier les enjeux susceptibles d'encourager ou de freiner les praticiens du marketing à commercialiser des collections spécifiques à destination de consommatrices stigmatisées comme les femmes musulmanes ou les femmes en surpoids. A partir d'entretiens avec des managers, d'observations en points de vente et de collecte de données secondaires, nous montrons que les managers rencontrent de nombreux freins relatifs au marché stigmatisé de la mode et comment ils tentent de les contourner à travers des stratégies ajustées. Nous introduisons la stratégie de marketing digital d'« E-inclusion » qui consiste à offrir en ligne des produits spécifiques aux consommateurs stigmatisés afin de réduire leur sentiment de manque d'inclusion.
    Date: 2021–05–19
  27. By: Gary B. Gorton; Chase P. Ross; Sharon Y. Ross
    Abstract: It is difficult for private agents to produce money that circulates at par with no questions asked. We study two cases of privately-produced money: pre-Civil War U.S. private banknotes and modern stablecoins. Private monies are introduced when there are no better alternatives, but they initially carry an inconvenience yield. Over time, these monies may become more money-like, but they do not always achieve a positive convenience yield. Technology advances and reputation formation pushed private banknotes toward a positive convenience yield. We show that the same forces are at work for stablecoins.
    JEL: E02 E4 E41 E42 E51 G1 G21
    Date: 2022–01
  28. By: Scott L. Fulford (Consumer Financial Protection Bureau); Scott Schuh (West Virginia University)
    Abstract: Credit card payments and revolving debt are important for consumer theory but a key data source—credit bureau records—does not distinguish between current charges and revolving debt from the previous month. We develop a theory-based econometric methodology informed by survey evidence to estimate the likelihood a consumer is revolving each quarter. We validate our approach using a new survey linked to credit bureau data. For likely revolvers: (1) 100 percent of an increase in credit becomes an increase in debt eventually; (2) credit limit changes are half as salient as debt changes; and (3) revolving status is extremely persistent.
    Keywords: Credit cards, revolving, convenience use, credit bureau
    JEL: C81 D14 G51
    Date: 2020–10
  29. By: Mohsen Asgari; Seyed Hossein Khasteh
    Abstract: Deep Reinforcement Learning solutions have been applied to different control problems with outperforming and promising results. In this research work we have applied Proximal Policy Optimization, Soft Actor-Critic and Generative Adversarial Imitation Learning to strategy design problem of three cryptocurrency markets. Our input data includes price data and technical indicators. We have implemented a Gym environment based on cryptocurrency markets to be used with the algorithms. Our test results on unseen data shows a great potential for this approach in helping investors with an expert system to exploit the market and gain profit. Our highest gain for an unseen 66 day span is 4850 US dollars per 10000 US dollars investment. We also discuss on how a specific hyperparameter in the environment design can be used to adjust risk in the generated strategies.
    Date: 2022–01
  30. By: Carlo Gola (Bank of Italy); Johannes Sedlmeir (University of Bayreuth)
    Abstract: This paper proposes policies to improve the environmental sustainability of distributed ledger technology (DLT). While the proof-of-work (PoW) consensus protocol requires large amounts of electricity, several DLT protocols consume much less, while still being sufficiently reliable and decentralized. To move from a PoW protocol to a greener system, such as proof-of-stake (PoS) or proof-of-authority (PoA), the consensus of the majority of miners (measured by their computing power) is required during the transition period to preserve the security requirements. Given that miners have an incentive to maintain the status quo, this paper illustrates various policies designed to bring about the transition. We aim to show that the current policy approach adopted by banking and financial regulators, based on the principle of technological neutrality, may need a reappraisal in order to consider the ‘sustainability’ criterion. Policymakers should not stifle financial innovation but should instead intervene if technology is a source of negative externalities.
    Keywords: blockchain, DLT, energy consumption, proof-of-work, proof-of-stake, proof-of-authority, carbon tax, prudential requirements, market infrastructures
    JEL: G18 Q56 O3 K2 H23 L63
    Date: 2022–02
  31. By: Nemo Semret
    Abstract: What happens to mining when the Bitcoin price changes, when there are mining supply shocks, the price of energy changes, or hardware technology evolves? We give precise answers based on the technical forces and incentives in the system. We then build on these dynamics to consider value: what is the cost and purpose of mining, and is it worth it? Does it use too much energy, is it bad for the environment? Finally we extend our analysis to the long term: is mining economically feasible forever? What will the global hash rate be in 40 years? How is mining impacted by the limits of computation and energy? Is it physically sustainable in the long run? From first principles, we derive a fundamental scale-invariant feasibility constraint, which enables us to analyze the interlocking dynamics, find key invariants, and answer these questions mathematically.
    Date: 2022–01
  32. By: Massoc, Elsa Clara
    Abstract: Are we in a new "Polanyian moment"? If we are, it is essential to examine how "spontaneous" and punctual expressions of discontent at the individual level may give rise to collective discourses driving social and political change. It is also important to examine whether and how the framing of these discourses may vary across political economies. This paper contributes to this endeavor with the analysis of anti-finance discourses on Twitter in France, Germany, Italy, Spain and the UK between 2019 and 2020. This paper presents three main findings. First, the analysis shows that, more than ten years after the financial crisis, finance is still a strong catalyzer of political discontent. Second, it shows that there are important variations in the dominant framing of public anti-finance discourses on social media across European political economies. If the antagonistic "us versus them" is prominent in all the cases, the identification of who "us" and "them" are, vary significantly. Third, it shows that the presence of far-right tropes in the critique of finance varies greatly from virtually inexistent to a solid minority of statements.
    Keywords: finance,opinion,social media,discourse analysis
    Date: 2022
    Abstract: This study provides evidence on barriers to digital trade and the economic effect of digital trade, based on surveys of domestic firms in Korea and data collected from random sampling. After briefly examining the prospects of e-commerce talks at the WTO and characterizing digital trade rules at the FTA level, the study concludes by providing suggestions for major policy tasks and mid- to long-term directions of Korea’s digital trade policy.
    Keywords: digital trade; trade policy; Korea; e-commerce; WTO; FTA
    Date: 2022–01–04
  34. By: Jonathan Eaton; David Jinkins; James R. Tybout; Daniel 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 profits. 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.
    JEL: F12 F14
    Date: 2022–01
  35. By: Scott Fulford (Consumer Financial Protection Bureau); Scott Schuh (West Virginia University)
    Abstract: Credit bureau data show remarkably stable consumer utilization of unsecured debt over the business cycle, life cycle, and individually quarter-to-quarter, despite massive variation in available credit. To explain these new findings, we propose a life-cycle consumption model with heterogeneous preferences, endogenous payment choice, and the option to revolve debt for consumption smoothing. Using diary data to identify payment use, the estimated model matches consumption and credit use at every frequency and suggests that around half the population has an endogenously high marginal propensity to consume. The results suggest understanding credit availability and heterogeneous use may lead to richer counter-cyclical policies.
    Keywords: Credit cards, life cycle, consumption, saving, precaution, buffer-stock, payments
    JEL: D14 D15 E21 E27
    Date: 2020–12–20
  36. By: Dario Pellegrino (Bank of Italy); Marco Molteni (Pembroke College, University of Oxford)
    Abstract: In this paper we describe the establishment and assess the relevance of banking supervision in Italy between 1926 and 1936. This case is particularly interesting from the international perspective, Italy having been the first European country to assign substantial supervision to its central bank, a few years before the 1929 crisis. Notwithstanding insufficient regulation and a light touch concerning the four major mixed banks, we document considerable enforcement of the law, which went beyond the initial provisions, thanks to the rather proactive supervisory approach adopted by the Bank of Italy. We point out a significant impact on the banking system: systematic archival analysis reveals that supervision fostered capital accumulation and mitigated lending concentration. Preliminary evidence suggests that supervision information enhanced effective lending of last resort during the crisis. Our educated guess is that, in the absence of the new supervisory set-up, the severity of the financial turmoil in the early 1930s in Italy would have been much fiercer, especially for small and medium-sized banks.
    Keywords: banking supervision, capital requirements, banking history, lending of last resort
    JEL: N20 N24
    Date: 2021–10

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.