nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2022‒03‒14
sixteen papers chosen by

  1. Platform-based business models and financial inclusion By Karen Croxson; Jon Frost; Leonardo Gambacorta; Tommaso Valletti
  2. Cloud computing's influence on digital marketing By Abid, Hofa
  3. Central bank digital currency: A review and some macro-financial implications By Hongyi Chen; Pierre Siklos
  4. Media and the Internet Access Providers in an Era of Convergence By Pierre-Jean Benghozi; Françoise Benhamou
  5. Hidden inequalities: the gendered labour of women on micro-tasking platforms By Paola Tubaro; Marion Coville; Clément Le Ludec; Antonio Casilli
  7. The tax burden on mobile network operators in Africa By Grégoire Rota-Graziosi; Fayçal Sawadogo
  8. Foreign Direct Investment, Information Technology and Total Factor Productivity Dynamics in Sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  9. The Data Privacy Paradox and Digital Demand By Long Chen; Yadong Huang; Shumiao Ouyang; Wei Xiong
  10. The real effects of FinTech lending on SMEs: evidence from loan applications By Ferreira, Miguel A.; Eça, Afonso; Prado, Melissa Porras; Rizzo, A. Emanuele
  11. Digital tools and agricultural market transformation in Africa: Why are they not at scale yet, and what will it take to get there? By Abay, Kibrom A.; Abate, Gashaw Tadesse; Chamberlin, Jordan; Kassim, Yumna; Spielman, David J.
  12. Application of K-means Clustering Algorithm in Evaluation and Statistical Analysis of Internet Financial Transaction Data By Shi Bo
  13. Assessment of Credit Card Market Features in Malaysia: Risk of Achieving Women’s Financial Empowerment By Alam, Md. Mahmudul; Ismail, Russayani; Said, Jamaliah; Pahlevi, Reza Widhar
  14. Is Metaverse LAND a good investment? It depends on your unit of account! By Voraprapa Nakavachara; Kanis Saengchote
  15. Search and Information Frictions on Global E-Commerce Platforms: Evidence from AliExpress By Jie Bai; Maggie X. Chen; Jin Liu; Xiaosheng Mu; Daniel Yi Xu
  16. A Personal View from the Wrong Side of the Subsequent Fifty Years By David Laidler

  1. By: Karen Croxson; Jon Frost; Leonardo Gambacorta; Tommaso Valletti
    Abstract: Three types of digital platforms are expanding in financial services: (i) fintech entrants; (ii) big tech firms; and (iii) increasingly, incumbent financial institutions with platformbased business models. These platforms can dramatically lower costs and thereby aid financial inclusion – but these same features can give rise to digital monopolies and oligopolies. Digital platforms operate in multi-sided markets, and rely crucially on big data. This leads to specific network effects, returns to scale and scope, and policy trade-offs. To reap the benefits of platforms while mitigating risks, policy makers can: (i) apply existing financial, antitrust and privacy regulations, (ii) adapt old and adopt new regulations, combining an activity and entity-based approach, and/or (iii) provide new public infrastructures. The latter include digital identity, retail fast payment systems and central bank digital currencies (CBDCs). These public infrastructures, as well as ex ante competition rules and data portability, are particularly promising. Yet to achieve their policy goals, central banks and financial regulators need to coordinate with competition and data protection authorities.
    Keywords: financial inclusion, fintech, big tech, platforms
    JEL: E51 G23 O31
    Date: 2021–12
  2. By: Abid, Hofa (Bt research scoiety)
    Abstract: Numerous cloud-based marketing apps, ranging from CRM systems to marketing automation tools, are already in widespread usage today. These services assist marketers in tracking their campaigns and efforts across mobile, social, and Web platforms, as well as consumer interactions. There are more methods to engage prospective clients in this technological era, as Internet use has expanded across devices - but it's also more difficult to capture their attention. Consumers want for material that is original, organic, engaging, and individualized. Marketers may use cloud technologies to create new plans based on data and to create more customized and targeted marketing. These tools are almost certainly going to be integrated with one of the following digital marketing components.
    Date: 2021–12–18
  3. By: Hongyi Chen; Pierre Siklos
    Abstract: Central Bank Digital Currency (CBDC) has attracted considerable interest and its deployment on a global scale is imminent. However, digital currencies face several challenges. They include: legal, technological, and political considerations. We summarize those challenges and add a few more that have not received much attention in the literature. We then consider two forms of CBDC: a narrow version that only replaces notes and coins and a broader form with a deposit feature. The narrow CBDC is the most likely one to be first introduced. Next, relying on evidence of past episodes of financial innovation, and using cross-country data, we explore the hypothetical impact of CBDC on inflation and financial stability, based on the historical behaviour of the velocity of circulation and incorporating a CBDC’s impact in McCallum’s policy rule which defines the stance of monetary policy based on money growth. Our simulations suggest that CBDC need not produce higher inflation, but financial stability remains at risk. We provide some policy implications.
    Keywords: Central Bank Digital Currency, Velocity, Money Demand, Monetary Policy, McCallum Rule
    JEL: O31 O33 E41 E42 E51 E52
    Date: 2022–01
  4. By: Pierre-Jean Benghozi (CNRS - Centre National de la Recherche Scientifique, i3-CRG - Centre de recherche en gestion i3 - X - École polytechnique - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique); Françoise Benhamou
    Abstract: Technological breakthroughs are an enabler in the convergence between telecommunications operators and media. Close economic examination put at stake the interpretation based on vertical integration and complementary strategies of telecom operators and content producers. Approach to convergence must be renewed because situation is not the same as 20 years ago. The multiplication of TV channels, the development of Internet, and the growing bandwidths have resulted in the explosion of online content. This has contributed to the expansion and predominance of digital platforms that invested significantly in content production and network infrastructure. These original converging strategies call for regulatory issues because the changes raise new challenges associated with the new market structure: segmentation of regulation perspective, competitive and non-price strategies, and net neutrality.
    Keywords: Telecoms industry,Convergence,Media regulation,Telecoms regulation,Internet platforms
    Date: 2021–03–17
  5. By: Paola Tubaro (LISN - Laboratoire Interdisciplinaire des Sciences du Numérique - CentraleSupélec - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique, TAU - TAckling the Underspecified - Inria Saclay - Ile de France - Inria - Institut National de Recherche en Informatique et en Automatique - LISN - Laboratoire Interdisciplinaire des Sciences du Numérique - CentraleSupélec - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique, CNRS - Centre National de la Recherche Scientifique); Marion Coville (CEREGE - Centre de Recherche en Gestion - IAE Poitiers - Institut d'Administration des Entreprises (IAE) - Poitiers - Université de Poitiers - Université de Poitiers - ULR - Université de La Rochelle - Excelia Group | La Rochelle Business School, IAE Poitiers - Institut d'Administration des Entreprises (IAE) - Poitiers - Université de Poitiers); Clément Le Ludec (SES - Département Sciences Economiques et Sociales - Télécom ParisTech, I3, une unité mixte de recherche CNRS (UMR 9217) - Institut interdisciplinaire de l’innovation - X - École polytechnique - Télécom ParisTech - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique, Télécom Paris, IP Paris - Institut Polytechnique de Paris, MSH Paris-Saclay - Maison des Sciences de l'Homme - Paris Saclay - UVSQ - Université de Versailles Saint-Quentin-en-Yvelines - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique - ENS Paris Saclay - Ecole Normale Supérieure Paris-Saclay); Antonio Casilli (SES - Département Sciences Economiques et Sociales - Télécom ParisTech, I3, une unité mixte de recherche CNRS (UMR 9217) - Institut interdisciplinaire de l’innovation - X - École polytechnique - Télécom ParisTech - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique, Télécom Paris, IP Paris - Institut Polytechnique de Paris)
    Abstract: Around the world, myriad workers perform micro-tasks on online platforms to train and calibrate artificial intelligence solutions. Despite its apparent openness to anyone with basic skills, this form of crowd-work fails to fill gender gaps, and may even exacerbate them. We demonstrate this result in three steps. First, inequalities in both the professional and domestic spheres turn micro-tasking into a ‘third shift' that adds to already heavy schedules. Second, the human and social capital of male and female workers differ– leaving women with fewer career prospects within a tech-driven workforce. Third, female micro-work reproduces relegation of women to lower-level computing work observed in the history of science and technology.
    Keywords: Digital platform labour,micro-work,gender inequalities,women's work,social capital
    Date: 2022
  6. By: Chen, T.C.
    Abstract: Traditional advertising is the main media employed by marketers in the FMCG sector to affect consumers decisions. However, people are exposed to plenty of advertising media from various forms and different channels every day, especially from social media. Therefore, digital advertising should be more powerful than traditional advertising in this era. This paper seeks to study when consumers choose daily necessities, whether these advertisements affect their decisions, and whether social media advertising effectively influences consumers purchase decisions. In order to promote the development of digital and social media advertising research in the FMCG sector, this paper proposes further research directions.
    Date: 2021–12–15
  7. By: Grégoire Rota-Graziosi (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne); Fayçal Sawadogo (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)
    Abstract: We estimate the tax burden on the mobile telecommunication sector in twenty-five African countries. This tax burden encompasses not only standard and particular taxes under the control of the Ministry of Finance (MoF), but also fees raised by national telecommunication Regulatory Agency (RA). Given the lack of financial data at the country level, we build a representative mobile network operator, named TELCO, using the GSMA Intelligence database. We compute the Average Effective Tax Rate (AETR) for this firm considering general and special taxes and fees levied only on the telecommunication sector. We develop a web application (, which allows the reader to replicate our analysis or to modify TELCO and tax parameters. The AETR varies significantly across countries, ranging from 33 percent in Ethiopia to 118 percent in Niger. Special taxes and fees represent a large share of the AETR illustrating some taxation by regulation and a potential tax competition (a race to the top) between the MoF and the RA. We compare the AETR of TELCO to this of a representative gold mining plant and a standard firm with similar gross return. The tax burden of the telecommunication sector is higher than this of the mining sector in 15 countries out of the 19 countries for which we have data on the gold mining sector.
    Keywords: Taxation,Telecommunication sector,Project analysis,Developing countries
    Date: 2021–01
  8. By: Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: Compared to other regions of the world, the potential for information technology penetration in sub-Saharan Africa (SSA) is very high. Unfortunately, productivity levels in the region are also very low. This study investigates the importance of information technology in influencing the effect of foreign direct investment (FDI) on total factor productivity (TFP) dynamics. The focus is on 25 countries in SSA. Information technology is measured with mobile phone penetration and internet penetration, while the engaged TFP productivity dynamics are TFP, real TFP, welfare TFP, and real welfare TFP. The empirical evidence is based on the Generalised Method of Moments. The findings show that, with the exception of regressions pertaining to real TFP growth for which the estimations do not pass post-estimation diagnostic tests, it is apparent that information technology (i.e. mobile phone penetration and internet penetration) modulate FDI to positively influence TFP dynamics (i.e. TFP, welfare TFP, and welfare real TFP). Policy and theoretical implications are discussed.
    Keywords: Productivity; Foreign Investment; Information Technology; Sub-Saharan Africa
    JEL: E23 F21 F30 L96 O55
    Date: 2022–01
  9. By: Long Chen (Luohan Academy); Yadong Huang (Luohan Academy); Shumiao Ouyang (Princeton University); Wei Xiong (Princeton University)
    Abstract: A central issue in privacy governance is understanding how users balance their privacy preferences and data sharing to satisfy service demands. We combine survey and behavioral data of a sample of Alipay users to examine how data privacy preferences affect their data sharing with third-party mini-programs on the Alipay platform. We find that there is no relationship between the respondents’ self-stated privacy concerns and their number of data-sharing authorizations, confirming the puzzling data privacy paradox. Instead of attributing this paradox to the respondents’ unreliable survey responses, resignation from active protection of their data privacy, or behavioral factors in making their data-sharing choices, we show that this phenomenon can be explained by a curious finding that users with stronger privacy concerns tend to benefit more from using mini-programs. This positive relationship between privacy concerns and digital demands further suggests that consumers may develop data privacy concerns as a by-product of the process of using digital applications, not because such concerns are innate.
    Keywords: data sharing, privacy
    JEL: D12 D91 M15
    Date: 2021–05
  10. By: Ferreira, Miguel A.; Eça, Afonso; Prado, Melissa Porras; Rizzo, A. Emanuele
    Abstract: We show that FinTech lending affects credit markets and real economic activity using a unique data set of a Peer-to-Business platform for which we have the universe of loan applications. We find that FinTech serves high quality and creditworthy small businesses who already have access to bank credit. Firms use FinTech to obtain long-term unsecured loans and reduce their exposure to banks with less liquid assets, stable funds, and capital. We find that access to FinTech spurs firm growth, employment and investment relative to firms that get their loan application rejected. In addition, firms with access to FinTech increase leverage and substitute long-term bank debt with FinTech debt. Our findings suggest that FinTech allows firms to preserve financial flexibility, reduce their bank dependence and exposure to banking shocks. JEL Classification: G21, G23, O33
    Keywords: bank relationships, debt structure, FinTech, firm growth, small business lending
    Date: 2022–02
  11. By: Abay, Kibrom A.; Abate, Gashaw Tadesse; Chamberlin, Jordan; Kassim, Yumna; Spielman, David J.
    Abstract: Despite enthusiasm on the potential of digital innovations to transform agricultural markets in Africa, progress made thus far has been limited to small-scale experiments that often fail to scale up. Realizing the full potential of digital innovations—tools, technologies, applications, and services—in Africa requires not just further development of these solutions at meaningful scales, but also more nuanced evidence from both successful and unsuccessful scaling efforts. This paper reviews the theoretical and empirical evidence on the transformative potential of digital innovations for African agricultural markets with an in-depth examination of solutions that have been rolled out to date in the continent. Specifically, the review addresses the following questions: (i) how can digital innovations improve the functioning of agricultural markets in Africa? (ii) what explains the apparent failure of most pilots to scale up? (iii) what is required to realize their full potential? and (iv) what are the emerging risks and opportunities associated with these digital innovations for agricultural marketing? Although our review of the landscape and literature on market-focused digital innovations in Africa identifies several reasons to remain optimistic, the prevailing disconnect between pilots and scale-ups merits further evaluation. In particular, there is a need for more systematic assessments of both successes and failures at different stages of piloting and scaling of digital solutions.
    Keywords: ETHIOPIA; EAST AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; digital technology; innovation; agriculture; markets; retail markets; market information services; digital divide; risk; food security; welfare; households; resilience; social protection; social safety nets; market information
    Date: 2021
  12. By: Shi Bo
    Abstract: The purpose is to promote the orderly development of China's Internet financial transactions and minimize default and delinquency in Internet financial transactions. Based on the typical big data algorithm (K-means algorithm), this paper discusses the concepts of the K-means algorithm and Internet financial transactions, as well as the significance of big data algorithms for Internet financial transaction data evaluation and statistical analysis. Meanwhile, the existing Internet financial transaction systems are reviewed, and their deficiencies are summarized, based on which relevant countermeasures and suggestions are put forward. At the same time, the K-means clustering algorithm is applied to evaluate financial transaction data, finding that it can improve the accuracy of data and reduce the error by 40%. But when the number of clusters is 7, the output result distribution interval of the K-means clustering algorithm is 4 days, and when the number of clusters is 10, the output result distribution interval of the K-means clustering algorithm is 6 days, indicating that the convergence effect of this algorithm is relatively good. Additionally, many small and micro individuals still hold a negative attitude towards the innovation and adjustment of Internet financial transactions, indicating that the construction of China's Internet financial transaction system needs further optimization. The satisfaction of most small and micro individuals with innovation and adjustment also shows that the proposed Internet financial transaction adjustment measures are feasible, can provide references for relevant Internet financial transactions, and contributes to the development of Internet financial transactions in China.
    Date: 2022–01
  13. By: Alam, Md. Mahmudul (Universiti Utara Malaysia); Ismail, Russayani; Said, Jamaliah; Pahlevi, Reza Widhar
    Abstract: There are many market segmentations in the credit card industry in Malaysia. One of the special categories of credit card is dedicated to the women group only and promoted as a tool for increasing women empowerment, women entrepreneurship development and women financial access ability. Therefore, this study compares the features of credit cards dedicated to women and credit cards in general in Malaysia through descriptive statistics and one-way ANOVA test. This study utilizes data of currently available total 234 unique credit cards including four credit cards dedicated to the women group. The data analyses 13 features of credit cards. Among them only two features of credit cards dedicated to women are statistically significantly different from credit cards in general, which are annual charge for balance transfer and cash back facility. Therefore, it is recommended to make more distinguish features in the credit cards that are dedicated to them to encourage more women entrepreneurship as well as to ensure their real financial empowerment. The outcomes of this research will provide useful interpretations to women consumers, business managers, NGOs, government agencies and other policymakers who are working on women’s development issues.
    Date: 2021–11–30
  14. By: Voraprapa Nakavachara; Kanis Saengchote
    Abstract: The Sandbox metaverse LAND non-fungible token (NFT) prices increased by than 300 times (in USD) between December 2019 and January 2022, but when measured in its native utility token (SAND), the increase is only 3 times. Depending on how prices are denominated, investment returns and effective transaction prices vary. We analyze more than 71,000 transactions and find that users are willing to pay 3-4% more when transactions are settled in SAND, and 30% less when settled in wETH (a smart contract version of ETH) when compared to ETH, so unit of account matters. Our results contribute to the discussions of blockchain-based, virtual economy management and the digitalization of money (Brunnermeier et al., 2019).
    Date: 2022–02
  15. By: Jie Bai (Harvard Kennedy School); Maggie X. Chen (George Washington University); Jin Liu (New York University); Xiaosheng Mu (Princeton University); Daniel Yi Xu (Duke University)
    Abstract: We study how search and information frictions shape market dynamics in global e-commerce. Observational data and self-collected quality measures from AliExpress establish the existence of search and information frictions. A randomized experiment that offers new exporters exogenous demand and information shocks demonstrates the potential role of sales accumulation in enhancing seller visibility and overcoming these demand frictions. However, we show theoretically and quantitatively that this demand-reinforcement mechanism is undermined by the large number of online exporters. Our structural model rationalizes the experimental findings and quantifies efficiency gains from reducing the number of inactive sellers.
    Keywords: global e-commerce, exporter dynamics, product quality, information frictions, search frictions
    JEL: F14 L11 O12
    Date: 2021–09
  16. By: David Laidler (University of Western Ontario)
    Abstract: Lucas (1972) was a paper that permanently changed the course of macroeconomics, even though its “money supply surprise†model lost its central place in the area within a decade because of empirical difficulties. However, Lucas’s novel methodology, based on clearing markets and rational expectations, still dominates orthodox macroeconomic theorising. An unfortunate side effect of this has been that, because mainstream models have no analytic room for money to play a key role in economic activity, the theoretical case for taking that role seriously was undermined just at the time when traditional monetarist macro-models were facing empirical problems. The consequences of all this for today’s monetary policy environment are briefly discussed.
    Keywords: Lucas; neutral money, monetarism, Keynesianism; micro-foundations; clearing-markets; inflation; recession
    JEL: E13 E31 E40 E52 N01
    Date: 2021

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