nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2022‒09‒12
24 papers chosen by

  1. Digital financial inclusion By Ozili, Peterson K
  2. Ireland: Financial Sector Assessment Program-Technical Note on Oversight of Fintech By International Monetary Fund
  3. Platforms, Tokens, and Interoperability By Markus Brunnermeier; Jonathan Payne
  4. The impact of derivatives on spot markets: Evidence from the introduction of bitcoin futures contracts By Augustin, Patrick; Rubtsov, Alexey; Shin, Donghwa
  5. Role of Instagram on the purchasing behavior of Moroccan consumers during the COVID-19 By Anass Bakkour; Zineb Youbi Idrissi; Mohammed Qmichchou; Samiha Lkhoumsi
  6. The economics of central bank digital currency By Ahnert, Toni; Assenmacher, Katrin; Hoffmann, Peter; Leonello, Agnese; Monnet, Cyril; Porcellacchia, Davide
  7. Anatomy of a Stablecoin's failure: the Terra-Luna case By Antonio Briola; David Vidal-Tom\'as; Yuanrong Wang; Tomaso Aste
  8. Platform scams: Brazilian workers’ experiences of dishonest and uncertain algorithmic management By Grohmann, Rafael; Pereira, Gabriel; Guerra, Abel; Abilio, Ludmila Costhek; Moreschi, Bruno; Jurno, Amanda
  9. Intervention for Cryptocurrency Emissions: A China Case Study By Scott Fan; Elliot Gyllensvärd; Erich Farkas; Julian Schutzner
  10. Technology, Innovation, and Financial Services: a speech at the VenCent Fintech Conference, Little Rock, Arkansas, August 17, 2022 By Michelle W. Bowman
  11. Effective digital loyalty strategies in services during COVID-19 pandemic: does digital adoption matter? By Niros, Meletios; Niros, Angelica
  12. Brexit and the Fintech Revolution in Europe - Lessons from the Bulgarian Digital Finance Cluster By Deyan Radev; Georgi Penev
  13. Competing for Attention on Information Platforms: The Case of News By Tim Meyer; Anna Kerkhof; Carmelo Cennamo; Tobias Kretschmer
  14. On the Stabilizing Role of Cash for Societies By Seitz, Franz; Rösl, Gerhard
  15. Unbiasing and robustifying implied volatility calibration in a cryptocurrency market with large bid-ask spreads and missing quotes By Mnacho Echenim; Emmanuel Gobet; Anne-Claire Maurice
  16. Scoring Aave Accounts for Creditworthiness By Will Wolf; Aaron Henry; Hamza Al Fadel; Xavier Quintuna; Julian Gay
  17. Transparency and Adverse Selection: Evidence from an Electronic Platform for Annuities By Eduardo Fajnzylber; Maria F. Gabrielli; Manuel Willington
  18. The optimal quantity of CBDC in a bank-based economy By Burlon, Lorenzo; Montes-Galdón, Carlos; Muñoz, Manuel A.; Smets, Frank
  19. BigTech credit and monetary policy transmission: Micro-level evidence from China By Huang, Yiping; Li, Xiang; Qiu, Han; Yu, Changhua
  20. Computable Contracts in the Financial Services Industry By Vinay K Chaudhri
  21. On Empirical Challenges in Forecasting Market Betas in Crypto Markets By Jan Sila; Michael Mark; Ladislav Kristoufek
  22. Are big data a radical innovation trigger or a problem-solving patch? The case of AI implementation by automotive incumbents By Quentin Plantec; Marie-Alix Deval; Sophie Hooge; Benoît Weil
  23. Machine ethics and African identities: Perspectives of artificial intelligence in Africa By Kohnert, Dirk

  1. By: Ozili, Peterson K
    Abstract: The paper defines digital financial inclusion, and highlights the goal of digital financial inclusion, the components of digital financial inclusion, the providers of digital financial services, the instruments for digital financial inclusion, the benefits of digital financial inclusion, the risks of digital financial inclusion, and the regulatory issues associated with digital financial inclusion. It also suggests ways to make digital financial inclusion work for the good of all. The paper concludes by offering some implications for policy making and practice in the digital finance ecosystem.
    Keywords: digital finance, artificial intelligence, financial inclusion, digital financial inclusion.
    JEL: G21 G23 G28 I31 I38
    Date: 2022
  2. By: International Monetary Fund
    Abstract: Ireland’s fintech sector is growing in importance through the entry of innovative new players and digital transformation of incumbents’ business models and products. The Irish Government has adopted an action plan for the development of Ireland’s international financial services sector that includes several initiatives of relevance to fintech. Meanwhile, the Central Bank of Ireland (the Central Bank), the integrated financial services regulator, engages with new entrants with a view to securing consumer interests and safeguarding the resilience of the financial system, thereby harnessing the benefits of fintech while managing additional risks it may generate. The largest sub-sector is represented by payment and e-money institutions (PIEMIs). Recent data show most Irish adults are using digital payments multiple times a week, while 24 percent use their mobile phone for contactless payments. Ownership of crypto-assets is also on the rise, especially among young adults. Beyond payments and crypto-assets, fintech activities are developing on a smaller scale in areas such as insurance and investment management. Meanwhile, the importance of market support firms, including cloud service providers (CSPs), continues to grow.
    Date: 2022–07–27
  3. By: Markus Brunnermeier (Princeton University); Jonathan Payne (Princeton University)
    Abstract: Digital money requires a ledger. By integrating this ledger with its other ledgers, a platform can enforce repayment of uncollateralized credit, beyond the ability of the banking sector. However, by controlling interoperability to other platforms’ ledgers, an incumbent platform can “lock-in†customers and increase its market power. Open banking, which gives users control of interoperability, limits uncollateralized credit. Introducing CBDC as digital legal tender (on an isolated ledger) hurts credit extension, but enhances it when combined with an open architecture public ledger as a “smart CBDC.â€
    Keywords: Tokens, ledgers, interoperability, smart contracts, platforms, open banking, open architecture, financial inclusion, “smart CBDC†, “PlatFiâ€
    JEL: E50 E59
    Date: 2022–06
  4. By: Augustin, Patrick; Rubtsov, Alexey; Shin, Donghwa
    Abstract: Cryptocurrencies provide a unique opportunity to identify how derivatives impact spot markets. They are fully fungible, trade across multiple spot exchanges at different prices, and futures contracts were selectively introduced on bitcoin (BTC) exchange rates against the USD in December 2017. Following the futures introduction, we find a significantly greater increase in cross-exchange price synchronicity for BTC-USD relative to other exchange rate pairs, as demonstrated by an increase in price correlations and a reduction in arbitrage opportunities and volatility. We also find support for an increase in price efficiency, market quality, and liquidity. The evidence suggests that futures contracts allowed investors to circumvent trading frictions associated with short sale constraints, arbitrage risk associated with block confirmation time, and market segmentation. Overall, our analysis supports the view that the introduction of BTC-USD futures was beneficial to the bitcoin spot market by making the underlying prices more informative.
    Keywords: bitcoin,blockchain,cryptocurrencies,derivatives,fintech,regulation
    JEL: G12 G13 G14 O33 Y80
    Date: 2022
  5. By: Anass Bakkour (Université Ibn Tofail Kenitra, Maroc); Zineb Youbi Idrissi (Université Mohammed V de Rabat, Maroc); Mohammed Qmichchou (Université Ibn Tofail Kenitra, Maroc); Samiha Lkhoumsi (USMBA - Université Sidi Mohamed Ben Abdellah)
    Abstract: With 1 billion monthly active users as of June 2018, Instagram is undoubtedly one of the most popular social networking apps in the world (TechCrunch, 2018). Hashtags have become the lingo of Generation Y. Instagram is a social media networking app that goes far beyond simply uploading and liking photos. This is perhaps one of the crucial reasons for its rise over other social media platforms like Snapchat, Facebook, etc. Indeed, social media platforms, such as Instagram, continue to gain users quickly and increasingly. Brands are using these platforms effectively with new strategies, in order to gain visibility among the public. Among the popular new tactics brands are using is the online "celebrity" known as a social media influencer (SMI). Brands use these celebrities to spread information and influence consumer perceptions. The use of the SMI in communication and marketing campaigns has gained widespread popularity in almost every industry, from beauty and fashion, home and family, health and fitness, travel and lifestyle, food and beverage, business and technology, and entertainment. With the closure of some physical stores, coupled with the potential danger of having to leave home since the first case of Covid19 in Morocco, consumers have turned to online shopping to find the products they need. It is in this perspective that this research takes place. In this article we seek to investigate "the impact of digital marketing through the influence of social networks on purchasing behavior during a health crisis". For this we will first present the factors that affect the purchasing behavior of Moroccan consumers with reference to Instagram. In the second point we will discuss the role of Instagram on the purchasing behavior of Moroccan consumers during a health crisis. Finally, we will present the results of the survey we conducted among 200 consumers using Instagram. The results of our research showed that age, income and education level influenced online shopping behavior during the Covid-19 crisis.
    Abstract: Avec 1 milliard d'utilisateurs actifs mensuels en juin 2018, Instagram est sans aucun doute l'une des applications des réseaux sociaux les plus populaires au monde (TechCrunch, 2018). Les hashtags sont devenus le jargon de la génération Y. Instagram constitue une application de réseautage de médias sociaux qui va bien au-delà du simple téléchargement et de l'appréciation de photos. C'est peut-être l'une des raisons cruciales de son essor par rapport aux autres médias sociaux comme Snapchat, Facebook, etc. En effet, les plateformes de médias sociaux, telles qu'Instagram, continuent de gagner rapidement et de plus en plus les utilisateurs. Les marques utilisent ces plateformes de manière efficace avec de nouvelles stratégies, afin de gagner en visibilité auprès du public. Parmi les nouvelles tactiques populaires utilisées par les marques est la « célébrité » en ligne connue sous le nom d'influenceur de médias sociaux (SMI). Les marques utilisent ces célébrités pour diffuser des informations et influencer les perceptions des consommateurs. L'utilisation du SMI dans les campagnes de communication et de marketing a gagné une grande popularité dans presque tous les secteurs, qu'il s'agisse de la beauté et de la mode, de la maison et de la famille, de la santé et de la forme physique, des voyages et du style de vie, de la nourriture et des boissons, des affaires et de la technologie ou du divertissement. Avec la fermeture de certains magasins physiques, couplée au danger potentiel de devoir quitter la maison depuis l'apparition du premier cas de Covid19 au Maroc, les consommateurs se sont tournés vers l'achat en ligne pour trouver les produits dont ils avaient besoin. C'est dans cette perspective que s'inscrit cette recherche. Au niveau de cet article nous cherchons à s'interroger sur « l'impact du marketing digital à travers l'influence par les réseaux sociaux sur le comportement d'achat en période de crise sanitaire ». Pour cela nous présenterons tout d'abord les facteurs qui affectent le comportement d'achat des consommateurs Marocains en référence à Instagram. Au niveau du deuxième point nous abordons le rôle d'Instagram sur le comportement d'achat des consommateurs Marocains en période de crise sanitaire. En dernier lieu nous exposerons les résultats de l'enquête qu'on a menée auprès de 200 consommateurs utilisant Instagram. Les résultats de notre recherche ont montré que l'âge, le revenu et le niveau d'éducation ont exercé une influence sur le comportement d'achat en ligne pendant la crise Covid-19.
    Keywords: Digital Marketing,Consumer buying behavior influencers,Instagram,Covid-19,Social media influencers.,Marketing Digital,Facteurs d’influence du comportement d'achat des consommateurs,Influenceurs des médias sociaux.
    Date: 2022–05–31
  6. By: Ahnert, Toni; Assenmacher, Katrin; Hoffmann, Peter; Leonello, Agnese; Monnet, Cyril; Porcellacchia, Davide
    Abstract: This paper provides a structured overview of the burgeoning literature on the economics of CBDC. We document the economic forces that shape the rise of digital money and review motives for the issuance of CBDC. We then study the implications for the financial system and discuss of a number of policy issues and challenges. While the academic literature broadly echoes policy makers’ concerns about bank disintermediation and financial stability risks, it also provides conditions under which such adverse effects may not materialize. We also point to several knowledge gaps that merit further work, including data privacy and the study of end‐user preferences for attributes of digital payment methods. JEL Classification: E41, E42, E51, E52, E58, G21
    Keywords: Central Bank Digital Currency, digital money, financial stability, monetary policy, payments
    Date: 2022–08
  7. By: Antonio Briola; David Vidal-Tom\'as; Yuanrong Wang; Tomaso Aste
    Abstract: We quantitatively describe the main events that led to the Terra project's failure in May 2022. We first review, in a systematic way, news from heterogeneous social media sources; we discuss the fragility of the Terra project and its vicious dependence on the Anchor protocol. We hence identify the crash's trigger events, analysing hourly and transaction data for Bitcoin, Luna, and TerraUSD. Finally, using state-of-the-art techniques from network science, we study the evolution of dependency structures for 61 highly capitalised cryptocurrencies during the down-market and highlight the absence of herding behaviour.
    Date: 2022–07
  8. By: Grohmann, Rafael; Pereira, Gabriel; Guerra, Abel; Abilio, 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.
    Keywords: Click farm platforms; microwork; platform labor; platform scam; ride-hailing; scam; Histories of Artificial Intelligence project
    JEL: R14 J01
    Date: 2022–07
  9. By: Scott Fan (UCL - University College of London [London]); Elliot Gyllensvärd (UCL - University College of London [London]); Erich Farkas (UCL - University College of London [London]); Julian Schutzner (UCL - University College of London [London])
    Abstract: This paper seeks to analyse the environmental effects of China's recent regulatory steps taken against cryptocurrencies and compare them with two policy alternatives. To evaluate the environmental impact, two baseline scenarios are used-a ban scenario and a no-ban scenario-which are then employed to compare China's intervention with two alternative policies; an emissions trading system or carbon taxes. It is estimated that China's decision to ban cryptocurrencies will result in a 25.7% reduction in CO2 emissions from the global Bitcoin network between mid-2021 and 2030. In comparison, under a hypothetical emission trading system (ETS) and carbon tax intervention the most stringent scenario is estimated to reduce global Bitcoin CO2 emissions by 2.9% and 8.5% between mid-2021 and 2030, respectively. Furthermore, this paper shows that the ETS and carbon tax are both restricted in their absolute ability to reduce CO2 emissions due to the difficulties associated with the practical implementation of such policies. This provides evidence for why, in terms of an environmental perspective, a cryptocurrency ban is the most effective policy in reducing the Bitcoin blockchain network's CO2 emissions. However, the paper also shows that the transition to Proof-of-Stake (PoS) blockchains may create an environment in which there is less of an argument for active government intervention in the cryptocurrency markets due to the protocol's high energy efficiency.
    Date: 2022–07–23
  10. By: Michelle W. Bowman
    Date: 2022–08–17
  11. By: Niros, Meletios; Niros, Angelica
    Abstract: E-consumer Behaviour is a shifting fast as more and more consumers migrate from physical to digital stores to limit physical interaction. This research explores the effectiveness of digital loyalty strategies in services’ industry under the light of the ongoing pandemic and the respective increase in terms of Digital Adoption (DA) within the industry. In addition, this study investigates the direct effects of perceived in-store infection threat (SIT). To collect data, online self-administered survey was utilized in Greece, where 235 adult consumers participated. Findings revealed that SIT benefits Repurchase Intentions (RI) of digital services, since it exerted positive direct effects in using digital channels. Moreover, DA moderates the effectiveness of loyalty strategies. As a result, marketing strategies and practices are proposed sensitive to digital adoption or frequency of use.
    Keywords: Customer Equity Drivers; e-Consumer Behaviour; COVID-19; Services
    JEL: M3 M31
    Date: 2022–07
  12. By: Deyan Radev (Faculty of Economics and Business Administration at Sofia University); Georgi Penev (Bulgarian Fintech Association, Sofia, Bulgaria)
    Abstract: This paper provides insights into the drivers of the resilience of the Fintech sector in Emerging Europe by analyzing the performance of 128 Bulgarian Fintech companies in the period 2000-2021. Our results show that larger and better capitalized Fintech companies which outsource their non-core activities and focus on their main competitive strengths tend to have higher operating income and profit. We also find substantial positive real-economy effects as these companies hire actively on the labor market to maintain their growth. The results are primarily driven by the post-Brexit period of 2016-2019. These results have important managerial and policy implications and provide interesting directions for future research.
    Keywords: Brexit, fintech, regional clusters, resilience, emerging markets
    JEL: G01 R00 R11 P25
    Date: 2022–08
  13. By: Tim Meyer; Anna Kerkhof; Carmelo Cennamo; Tobias Kretschmer
    Abstract: Mainstream logic supports the idea that platforms bring large benefits to firms, especially smaller ones, by opening up access to a broader set of consumers and making firms’ products easier to find. However, this argument mostly applies to transaction platforms that match consumer preferences to products. On information platforms such as social media or news aggregators, firms compete for consumer attention, not matches. We argue that consumer attention and choice in contexts such as news content are driven by the size and focus of content providers. Providers sufficiently large to be recognized by consumers and sufficiently broad in their focus to cover multiple content categories of interest to consumers are better positioned to capture a significant share of consumer attention, and thus demand, compared to smaller and more narrow competitors. We develop a simple formalization of our reasoning and find empirical support for it by exploiting a legal dispute leading to the removal of a group of German news outlets from news aggregators.
    Keywords: information platforms, competition for attention, consumer attention, news aggregators, news content
    Date: 2022
  14. By: Seitz, Franz; Rösl, Gerhard
    Abstract: In this paper, we focus on the stabilizing role of cash from a society-wide perspective. Starting with conceptual remarks on the importance of money for the economy in general, special attention is paid to the unique characteristics of cash. As these become apparent especially during crisis periods, a comparison of the Great Depression (1929 – 1933) and the Great Recession 2008/09 shows the devastating effects of a severe monetary contraction and how a fully elastic provision of cash can help to avoid such a situation. We find interesting similarities to both crises in two separate case studies, one on the demonetization in India 2016 and the other on cash supply during various crises in Greece since 2008. The paper concludes that supply-driven cash withdrawals from circulation (either by demonetization or by capital controls) destabilize the economy if electronic payment substitutes are not instantly available. However, as there is no perfect substitute for cash due to its unique properties, from the viewpoint of the society as a whole an efficient payment mix necessarily includes cash: It helps to stabilize the economy not only in times of crises in general, no matter which government is in place. Consequently, it should be the undisputed task of central banks to ensure that cash remains in circulation in normal times and is provided in a fully elastic way in times of crisis.
    Keywords: Cash, banknotes, money, crises, stabilization
    JEL: E41 E51 E58
    Date: 2022–06
  15. By: Mnacho Echenim; Emmanuel Gobet; Anne-Claire Maurice
    Abstract: We design a novel calibration procedure that is designed to handle the specific characteristics of options on cryptocurrency markets, namely large bid-ask spreads and the possibility of missing or incoherent prices in the considered data sets. We show that this calibration procedure is significantly more robust and accurate than the standard one based on trade and mid-prices.
    Date: 2022–07
  16. By: Will Wolf; Aaron Henry; Hamza Al Fadel; Xavier Quintuna; Julian Gay
    Abstract: Scoring the creditworthiness of accounts that interact with decentralized financial (DeFi) protocols remains an important yet unsolved problem. In this paper, we propose a credit scoring system for those accounts that have interacted with the Aave v2 liquidity protocol. The key component of this system is a tree-based binary classifier that predicts "position delinquency." To the community, we provide our method, results, and the (abridged) dataset on which this system is built.
    Date: 2022–07
  17. By: Eduardo Fajnzylber (Universidad Adolfo Ibáñez); Maria F. Gabrielli (Universidad del Desarrollo); Manuel Willington (Universidad del Desarrollo)
    Abstract: In this letter we show robust evidence that the introduction of an electronic platform in the Chilean annuity market in 2004 exacerbated adverse selection. Male and femaleannuitants who retired after 2004 live around two years longer than non-annuitants, while before the difference was smaller or non statistically significant. Post 2004, thefraction of annuitants decreased despite the fact that the deals offered by insurance companies improved. These facts are consistent with the electronic platform bringingtransparency, competition, and reducing the scope for sales agents to affect retirees’ choices.
    Keywords: Adverse selection, annuities, market transparency, Chilean pension system
    JEL: G14 G22 J32 D82
    Date: 2022–08
  18. By: Burlon, Lorenzo; Montes-Galdón, Carlos; Muñoz, Manuel A.; Smets, Frank
    Abstract: We provide evidence on the estimated effects of digital euro news on bank valuations and lending and find that they depend on deposit reliance and design features aimed at calibrating the quantity of CBDC. Then, we develop a quantitative DSGE model that replicates such evidence and incorporates key selected mechanisms through which CBDC issuance could affect bank intermediation and the economy. Under empirically-relevant assumptions (i.e., central bank collateral requirements and imperfect substitutability across CBDC, cash and deposits), the issuance of CBDC yields non-trivial trade-offss and effects through an expansion of the central bank balance sheet and profits. The issuance of CBDC exerts a smoothing effect on lending and real GDP by stabilizing deposit holdings. Such "stabilization effect" improves the well-known liquidity services/disintermediation trade-off induced by CBDC and permits to rank different types of CBDC rules according to individual and social preferences. Welfare-maximizing CBDC policy rules are effective in mitigating the risk of bank disintermediation and induce significant welfare gains. JEL Classification: E42, E58, G21
    Keywords: bank intermediation, central bank digital currency, DSGE models
    Date: 2022–07
  19. By: Huang, Yiping; Li, Xiang; Qiu, Han; Yu, Changhua
    Abstract: This paper studies monetary policy transmission through BigTech and traditional banks. By comparing business loans made by a BigTech bank with those made by traditional banks, it finds that BigTech loans tend to be smaller, and the BigTech bank grants credit to more new borrowers compared with conventional banks in response to expansionary monetary policy. The BigTech bank's advantages in information, monitoring, and risk management are the potential mechanisms. The analysis also finds that BigTech and traditional bank credits to firms that have already borrowed from these banks respond similarly to changes in monetary policy. Overall, BigTech credit amplifies monetary policy transmission mainly through the extensive margin. In addition, monetary policy has a stronger impact on the real economy through BigTech lending than traditional bank loans.
    Keywords: bank lending,financial technology,monetary policy transmission
    JEL: E52 G21 G23
    Date: 2022
  20. By: Vinay K Chaudhri
    Abstract: A computable contract is a contract that a computer can read, understand and execute. The financial services industry makes extensive use of contracts, for example, mortgage agreements, derivatives contracts, arbitration agreements, etc. Most of these contracts exist as text documents, making it difficult to automatically query, execute and analyze them. In this vision paper, we argue that the use of computable contracts in the financial services industry will lead to substantial improvements in customer experience, reductions in the cost of doing legal transactions, make it easier to respond to changing laws, and provide a much better framework for making decisions impacted by contracts. Using a simple payment agreement, we illustrate a Contract Definition Language, sketch several use cases and discuss their benefits to the financial services industry.
    Date: 2022–07
  21. By: Jan Sila (Institute of Economic Studies, Faculty of Social Sciences, Charles University & The Czech Academy of Sciences, Institute of Information Theory and Automation, Prague, Czech Republic); Michael Mark (Chair of Operations, Economics and Strategy, Ecole Polytechnique Federale de Lausanne, Station 5, CH-1015 Lausanne, Switzerland); Ladislav Kristoufek (Institute of Economic Studies, Faculty of Social Sciences, Charles University & The Czech Academy of Sciences, Institute of Information Theory and Automation, Prague, Czech Republic)
    Abstract: This paper investigates the predictability of market betas for crypto assets. The market beta is the optimal weight of a short position in a simple two-asset portfolio hedging the market risk. Investors are therefore keen to forecast the market beta accurately. Estimating the market beta is a fundamental financial problem and we document pervasive empirical issues that arise in the emerging market of crypto assets. Although recent empirical results about US stocks suggest predictability of the future realized betas about 55%, predictability for the universe of crypto assets is at most 20%. Our results suggest that the crypto market betas are highly sensitive not only to the beta estimation method but also to the selection of the market index. Thus we also contribute to the discussion on the appropriate market representation.
    Keywords: C21,C53,C58,G12
    Date: 2022–08
  22. By: Quentin Plantec (TSM - Toulouse School of Management Research - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - CNRS - Centre National de la Recherche Scientifique - TSM - Toulouse School of Management - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées); Marie-Alix Deval; Sophie Hooge; Benoît Weil
    Abstract: Big data, supported by AI technologies, is mainly viewed as a trigger for radical innovation. The automotive industry appears as a key example: the most critical innovative challenges (e.g., autonomous driving, connected cars) imply drawing more extensively on big data. But the degree of innovativeness of the industrial purpose of incumbents, who are already embedding such technologies in their end-products, is worth investigating. To answer this research question, we relied on a mixed-method approach and used knowledge search as a theoretical framework. First, we conducted a quantitative analysis on 46,145 patents from the top-19 automotive incumbents. By comparing AI and non-AI patents, we showed that incumbents mainly rely on knowledge exploitation for data-driven innovation leading to incremental innovations. But, surprisingly, such innovation path foster more technologically original inventions with AI, which is not the case for non-AI patents. Second, we conducted a qualitative study to better understand this phenomenon. We showed that big data and AI technologies are integrated in the industrialization phase of new vehicles development process, following creative problem-solving logics. We also retrieved technical and organizational challenges limiting data-driven innovation. Those findings are discussed regarding the knowledge search and the new product development literature in the context of automotive industry.
    Keywords: Big data,AI technologies,automotive industry,digital transformation
    Date: 2022–06
  23. By: Kohnert, Dirk
    Abstract: Artificial Intelligence (AI) has been embraced enthusiastically by Africans as a new resource for African development. AI could improve well-being by enabling innovation in business, education, health, ecology, urban planning, industry, etc. However, the high expectations could be little more than pious wishes. There are still too many open questions regarding the transfer required, and the selection of appropriate technology and its mastery. Given that the 'technology transfer' concept of modernization theories of the 1960s utterly failed because it had not been adapted to local needs, some scholars have called for an endogenous concept of African AI. However, this caused a lot of controversies. Africa became a battlefield of 'digital empires' of global powers due to its virtually non-existent digital infrastructure. Still, African solutions to African problems would be needed. Additionally, the dominant narratives and default settings of AI-related technologies have been denounced as male, gendered, white, heteronormative, powerful, and western. The previous focus on the formal sector is also questionable. Innovators from the informal sector and civil society, embedded in the local sociocultural environment but closely linked to transnational social spaces, often outperform government development efforts. UNESCO also warned that the effective use of AI in Africa requires the appropriate skills, legal framework and infrastructure. As in the past, calls by African politicians for a pooling of resources, a pan-African strategy, were probably in vain. AI may develop fastest in the already established African technology hubs of South Africa, Nigeria and Kenya. But promising AI-focused activities have also been identified in Ethiopia and Uganda. Gender equality, cultural and linguistic diversity, and changes in labour markets would also be required for AI to enhance rather than undermine socioeconomic inclusion. In addition, ethical questions related to a specific African identity have been raised. The extent to which African ideas of humanity and humanitarianism should be taken into account when developing an African AI remains an open question. In short, calling for the rapid deployment of AI in Africa could be a double-edged sword.
    Keywords: Artificial Intelligence; Innovation;, Machine learning; Big Data Analytics; moral values; AI ethics; African ethics; African philosophy; Africa; Sub-Saharan Africa; economic development; human development; informal sector; poverty; famine; international trade; global power; fragile state; South Africa; Nigeria; Kenya; Uganda; Ethiopia; Postcolonialism; African Studies;
    JEL: E24 E26 F15 F22 F35 F54 F63 I3 J4 J46 L26 M1 M13 N77 O32 O33 O35 P46 Q14 Z13
    Date: 2022–07–17
  24. By: Sheilla Nyasha; Nicholas M. Odhiambo
    Abstract: In this paper, we have empirically examined the impact of remittances on economic growth in South Africa over the period from 1970-2019. The study was motivated by the conflicting empirical findings that have emerged in the literature on the impact of remittance on economic growth in various countries. The study was also motivated by the need to find an empirical backing on the assertion that remittances are good for economic growth and can play a key role in lowering the inequality levels in developing countries. Using the autoregressive distributed lag (ARDL) bounds testing approach, the empirical results, contrary to expectations, have revealed that in South Africa, remittances have a negative impact on economic growth, irrespective of whether the regression analysis is conducted in the long run, or in the short run. The study, therefore, cautions policy makers when it comes to policies related to harnessing remittances for economic growth. The study argues that it is not only remittance inflows that matter, but also how the remittances are utilised to influence economic growth.

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