nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2022‒10‒10
seventeen papers chosen by
Bernardo Bátiz-Lazo
Northumbria University

  1. Demand-side mobile money drivers of financial inclusion: minimum economic growth thresholds for mobile money innovations By Simplice A. Asongu; Raufhon Salahodjaev
  2. Mobile Money Taxation and Informal Workers: Evidence from Ghana’s E-Levy By Akua Anyidoho, Nana; Gallien, Max; Rogan, Mike; van den Boogaard, Vanessa
  3. The real effects of FinTech lending on SMEs: Evidence from loan applications By Afonso Eca; Miguel A. Ferreira; Melissa Porras Prado; A. Emanuele Rizzo
  4. Information Technology, Business Sustainability and Female Economic Participation in Sub-Saharan Africa By Simplice A. Asongu; Mushfiqur Rahman; Mohammad Alghababsheh
  5. On the Pricing Effects of Bitcoin Mining in the Fossil Fuel Market: The Case of Coal By Xolani Sibande; Riza Demirer; Rangan Gupta
  6. Social Media and Mental Health By Braghieri, Luca; Levy, Ro'ee; Makarin, Alexey
  7. Platform Liability and Innovation By Jeon, Doh-Shin; Lefouili, Yassine; Madio, Leonardo
  8. Empowering users to control ads and its effects on website stickiness By Werner, Dominick; Adam, Martin; Benlian, Alexander
  9. Credit Card Profitability By Robert M. Adams; Vitaly M. Bord; Bradley Katcher
  10. The relationship between retailer app use, perceived shopping value and loyalty: the moderating role of deal proneness By Michaël Flacandji; Mariana Vlad
  11. Deep Reinforcement Learning for Cryptocurrency Trading: Practical Approach to Address Backtest Overfitting By Berend Gort; Xiao-Yang Liu; Xinghang Sun; Jiechao Gao; Shuaiyu Chen; Christina Dan Wang
  12. What analytical framework for Sovereign Money? Some insight from the 100% Money literature, and a comment on criticisms By Samuel Demeulemeester
  13. Measuring the Velocity of Money By Carolina E. S. Mattsson; Allison Luedtke; Frank W. Takes
  14. Die Rolle moderner Technologien, insbesondere Blockchain, in der Lieferkettenverantwortung By Stefan Craß; Alexander Eisl; Nedim Begic; Romana Polt
  15. Platform Governance in the Sharing Economy: Curation, Self-Regulation and Public Policy By Noriyuki Doi
  16. Response to the MEITY consultation on the draft National Data Governance Framework Policy By Rishab Bailey; Ajay Shah; Ameya Naik; Brinda Lashkari
  17. Enhancing banknote authentication by guiding attention to security features and prevalence expectancy By Frank van der Horst; Joshua Snell; Jan Theeuwes

  1. By: Simplice A. Asongu (Yaounde, Cameroon); Raufhon Salahodjaev (Tashkent, Uzbekistan)
    Abstract: This study provides minimum economic growth (or GDP growth) critical masses or thresholds that should be exceeded in order for demand-side mobile money factors to favorably drive mobile money innovations for financial inclusion in developing countries. The considered mobile money innovations are: mobile money accounts, the mobile phone used to send money and the mobile phone used to receive money. The empirical evidence is based on Tobit regressions. For positive net relationships that are established, an extended analysis is engaged to provide minimum GDP growth levels required to sustain the positive net nexuses. From this extended analysis, in order for economic growth to modulate demand-side mobile money drivers to favorably influence mobile money innovations, minimum GDP growth rates are: (i) 3.875% for the nexus between bank accounts and the mobile phone used to send money; (ii) 3.769 % for the relationship between automated teller machine (ATM) penetration and the mobile used to send money and (iii) 3.666% for the nexus between ATM penetration and the mobile phone used to receive money.
    Keywords: Mobile money; technology diffusion; financial inclusion; inclusive innovation
    JEL: D10 D14 D31 D60 O30
    Date: 2022–01
  2. By: Akua Anyidoho, Nana; Gallien, Max; Rogan, Mike; van den Boogaard, Vanessa
    Abstract: The use of digital financial services, including money transfers and mobile money, have expanded widely in lower-income countries in the past decade; 47 per cent of the population of sub-Saharan Africa (548 million) had a registered mobile money account in 2020, with 29 per cent of those accounts representing active users (Andersson-Manjang and Naghavi 2021: 8). Among lower-income countries for which data is available, the average number of mobile money accounts is more than double the number of commercial bank accounts. In many lower-middle-income countries, mobile money usage is the same or more than commercial bank usage (Bazarbash et al. 2020). Alongside this growth, governments have increasingly sought to tax DFS, rooted in deeper discussions about the role that technology can play in increasing tax revenue and strengthening overall state capacity (Fan et al. 2020; Okunogbe and Santoro 2021). While capturing revenue from DFS can come from many sources, mobile money taxes in particular have often been introduced due to the untapped revenue potential and the relatively convenient and easy nature of the tax handle (Lees and Akol 2021a) – particularly in relation to, say, corporate income taxes on financial service providers. As noted above, the search for revenue is often closely linked to a desire to capture revenue from workers in the informal economy, who are often framed as tax evaders.
    Keywords: Finance, Work and Labour,
    Date: 2022
  3. By: Afonso Eca; Miguel A. Ferreira; Melissa Porras Prado; A. Emanuele Rizzo
    Abstract: We examine the effects of FinTech lending on firm policies using proprietary data on loan applications and loans granted from a peer-to-business platform. We find that FinTech serves high quality and creditworthy small businesses who already have access to bank credit. Firms access FinTech to obtain long-term unsecured loans and reduce their exposure to banks with less liquid assets, stable funds, and capital. We find that firms with access to FinTech loans significantly increase investment, employment, and sales growth relative to firms that get their loan application rejected. We identify these effects by exploiting the number of banks in each municipality as a source of exogenous variation in the probability of obtaining a FinTech loan. Our findings suggest that FinTech allows firms to improve their financial flexibility and reduce bank dependence.
    Keywords: FinTech, SMEs, Small business lending, Lending relationships, Firm growth, Investment, Leverage, Debt structure
    JEL: G21 G23 O33
    Date: 2022
  4. By: Simplice A. Asongu (Yaounde, Cameroon); Mushfiqur Rahman (University of Wales Trinity Saint David, UK); Mohammad Alghababsheh (Mutah University, Jordan)
    Abstract: This study assesses how business/financial sustainability in the perspective of financial stability moderates information technology to influence female economic participation in 49 countries in Sub-Saharan Africa for the period 2008-2018. The empirical evidence is based on Tobit regressions that enabled the study to account for the censored nature of the outcome variables. The following important findings are established. First, ICT dynamics (mobile phone penetration, internet penetration and fixed broadband subscriptions) are consistently moderated by business sustainability to positively affect female employment in the industry. Second, business sustainability scores need to exceed certain thresholds before moderating fixed broadband subscriptions to induce favorable overall effects on female employment, female labour force participation and female unemployment rates. These thresholds are 18.742 and 19.505 Z-scores for positive effects on female employment and female labour force participation, respectively and a Z-score of 17.300 for a negative impact on female unemployment. The thresholds which should be exceeded are within policy reach, make economic sense and are policy relevant. The study contributes to the extant literature by providing actionable thresholds of business sustainability that can be employed by policy makers in order for information technology to positively influence female economic inclusion in Sub-Saharan Africa.
    Keywords: information technology; business sustainability, gender inclusion
    JEL: E23 F21 F30 L96 O55
    Date: 2022–01
  5. By: Xolani Sibande (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Riza Demirer (Department of Economics and Finance, Southern Illinois University Edwardsville, Edwardsville, IL 62026-1102, USA); Rangan Gupta (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa)
    Abstract: This paper examines the effect of crypto-currency mining activities on fossil fuel price dynamics, focusing on the coal market. Specifically, we utilise static and time-varying Granger causality tests to explore the causal linkages between Bitcoin electricity consumption and coal prices captured by the Argus/McCloskey's Coal Price Index for coal imported into northwest Europe. The results unsurprisingly reveal a time-varying causal link from the coal price to Bitcoin mining activities' electricity consumption. That is, the coal price is a constraint on mining activities. Surprisingly the evidence in the opposite direction is stronger, suggesting that electricity consumption from Bitcoin mining activities impacts the coal price. This interplay suggests that electricity consumption from Bitcoin mining activities may be larger than current estimates.
    Keywords: Time-varying Granger causality, Crypo-currency market, Commodity Markets, Coal price
    JEL: C12 C32 C58 G14 Q02
    Date: 2022–09
  6. By: Braghieri, Luca (LMU Munich); Levy, Ro'ee (MIT); Makarin, Alexey (EIEF and CEPR)
    Abstract: The diffusion of social media coincided with a worsening of mental health conditions among adolescents and young adults in the United States, giving rise to speculation that social media might be detrimental to mental health. In this paper, we provide the first quasi-experimental estimates of the impact of social media on mental health by leveraging a unique natural experiment: the staggered introduction of Facebook across U.S. colleges. Our analysis couples data on student mental health around the years of Facebook’s expansion with a generalized difference-in-differences empirical strategy. We find that the roll-out of Facebook at a college increased symptoms of poor mental health, especially depression, and led to increased utilization of mental healthcare services. We also find that, according to the students’ reports, the decline in mental health translated into worse academic performance. Additional evidence on mechanisms suggests the results are due to Facebook fostering unfavorable social comparisons.
    JEL: D12 D72 D90 I10 L82 L86
    Date: 2022–02–24
  7. By: Jeon, Doh-Shin; Lefouili, Yassine; Madio, Leonardo
    Abstract: We study a platform’s incentives to delist IP-infringing products and the effects of holding the platform liable for the presence of such products on innovation and consumer welfare. For a given number of buyers on the platform, platform liability increases innovation by reducing the competitive pressure that innovative products face from IP-infringing products. However, platform liability can have unintended consequences, which can overturn this intended effect on innovation. Moreover, there can be a misalignment of interests between innovators and buyers as platform liability reduces consumer surplus for a given number of innovators. We also analyze how different types of cross-group network effects affect the impact of platform liability on innovation and consumer welfare.
    Keywords: Platform, Liability, Intellectual Property, Innovation.
    JEL: K40 K42 K13 L13 L86
    Date: 2022–09–19
  8. By: Werner, Dominick; Adam, Martin; Benlian, Alexander
    Date: 2022
  9. By: Robert M. Adams; Vitaly M. Bord; Bradley Katcher
    Abstract: Credit cards are one of the most ubiquitous consumer financial products in the United States, with more than 75 percent of households owning at least one general purpose credit card in 2019. According to the G.19 Consumer Credit Statistical release, revolving consumer credit, which mainly consists of credit cards and related plans, stood at over one trillion dollars at the end of 2021.
    Date: 2022–09–09
  10. By: Michaël Flacandji (IRGO - Institut de Recherche en Gestion des Organisations - UB - Université de Bordeaux - Institut d'Administration des Entreprises (IAE) - Bordeaux); Mariana Vlad (IRGO - Institut de Recherche en Gestion des Organisations - UB - Université de Bordeaux - Institut d'Administration des Entreprises (IAE) - Bordeaux)
    Abstract: Purpose This paper studies the effects of retailer app use on perceived shopping value and loyalty toward the retailer. It also investigates whether deal proneness moderates the relationship between app use and perceived shopping value. Design/methodology/approach: A sample of 427 French consumers took part in an online survey inquiring about a recent shopping experience. The authors compared customers who used a retailer app during their shopping experience with those who did not. Mediation and moderated mediation using PROCESS were performed to identify whether retailer app use improves loyalty intentions through perceived shopping value, with deal proneness used as a moderator. Findings: The results show a positive and direct effect of retailer app use on loyalty. The effect is also mediated by utilitarian and hedonic shopping values. The authors also highlight the fact that deal proneness moderates the mediation effect of both utilitarian and hedonic shopping values between retailer app use and loyalty. More specifically, retail app use significantly increases shopping value for deal-prone customers. Originality/value: In the age of omnichannel retailing, this study offers potential contributions to improve the theoretical knowledge of the impact of retailer apps on retailer–customer relations, helping businesses to develop and implement appropriate app-related strategies.
    Keywords: Deal proneness,Retailer app,App use,Loyalty to the retailer,Perceived shopping value,Omnichannel
    Date: 2022
  11. By: Berend Gort; Xiao-Yang Liu; Xinghang Sun; Jiechao Gao; Shuaiyu Chen; Christina Dan Wang
    Abstract: Designing profitable and reliable trading strategies is challenging in the highly volatile cryptocurrency market. Existing works applied deep reinforcement learning methods and optimistically reported increased profits in backtesting, which may suffer from the false positive issue due to overfitting. In this paper, we propose a practical approach to address backtest overfitting for cryptocurrency trading using deep reinforcement learning. First, we formulate the detection of backtest overfitting as a hypothesis test. Then, we train the DRL agents, estimate the probability of overfitting, and reject the overfitted agents, increasing the chance of good trading performance. Finally, on 10 cryptocurrencies over a testing period from 05/01/2022 to 06/27/2022 (during which the crypto market crashed two times), we show that the less overfitted deep reinforcement learning agents have a higher Sharpe ratio than that of more over-fitted agents, an equal weight strategy, and the S&P DBM Index (market benchmark), offering confidence in possible deployment to a real market.
    Date: 2022–09
  12. By: Samuel Demeulemeester (TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The 2007-2008 Global Financial Crisis has brought renewed interest in the 100% Money reform idea of the 1930s', the essence of which was to require 100% reserves on transaction deposits so as separate money issuance from bank loans. A modern version of this idea, the Sovereign Money proposal, has been much discussed in recent years. Some heterodox economists have harshly criticized Sovereign Money advocates for lacking a clear analytical framework, as well as for disregarding "established" literature on such topics as the causality relationship between money and prices, the accommodation of business needs, financial instability, or the seigniorage privilege. The literature on 100% Money, however, appears to have been largely overlooked by both sides of the debate-even though, as this article shows, it could have brought valuable theoretical insight to the discussion. Building upon the arguments of the 100% Money writers, this paper concludes that many of the criticisms addressed to the Sovereign Money proposal are either inconclusive or misplaced.
    Keywords: 100% money,Sovereign Money,full reserve banking,endogenous money,financial instability B26,E30,E42
    Date: 2022–08–15
  13. By: Carolina E. S. Mattsson; Allison Luedtke; Frank W. Takes
    Abstract: The velocity of money is an important driver of inflation that is conventionally measured as an average for an economy as a whole. While easy to calculate from macroeconomic aggregates, such measures overlook possibly relevant heterogeneity between payment systems, across regions, and intrinsic to spending patterns. This paper proposes a new measurement methodology that leverages large-scale micro-level transaction data and modern computational techniques to measure the transfer velocity of money at the level of individual spenders, enabling comparison between subgroups. Notably, our definition of transfer velocity extends to payment systems where users are free to deposit and withdraw, even as the total balance fluctuates. This is a common feature of real-world payment systems that is not accounted for by previous approaches. We estimate the transfer velocity of Sarafu, a digital community currency in Kenya, using a newly available data set describing individual transactions over a period of time that includes the COVID-19 pandemic. Our analysis reveals distributional, temporal and geographical heterogeneity in spending patters. Some units of Sarafu are held for minutes, others for months. The system experienced dramatic changes in its total balance and in its average transfer velocity as the COVID-19 pandemic unfolded, and in response to known administrative operations. Moreover, transaction rhythms differed substantially between rural and urban areas, in particular, money moves faster in urban communities. Successful macroeconomic policies require understanding how individuals experience the economy and when those experiences diverge. The data-driven approach described in this paper improves our understanding of the heterogeneity underlying macroeconomic indicators, and represents an advance in measurement that stands to improve economic monitoring.
    Date: 2022–09
  14. By: Stefan Craß; Alexander Eisl; Nedim Begic; Romana Polt
    Abstract: Die Studie untersucht die Potenziale und Herausforderungen von modernen Technologien im Bereich Lieferkettenverantwortung, mit einem besonderen Fokus auf Blockchains. Derartige Technologien bieten Dank der Dezentralität und der zugrundeliegenden kryptographischen Verfahren die Möglichkeiten, die entlang der Lieferkette anfallenden Informationen transparent, nachvollziehbar und unveränderbar zu speichern. Die mögliche Automatisierung von Prozessen erleichtert die Einhaltung der Lieferkettenverantwortung weiter. Gleichzeitig gibt es Herausforderungen, etwa bei den Datenschnittstellen und der Interoperabilität unterschiedlicher Lösungen. Hier könnten einheitliche Standards Abhilfe schaffen. In Österreich gibt es aktuell erst wenige Unternehmen, die sich erfolgreich mit dem Einsatz von Blockchain-Technologie im Bereich Lieferketten beschäftigen. Die Unterstützung von Unternehmen (insbes. KMU) bei der Durchführung von Blockchain-Projekten könnte für Österreich Standort- und für die Unternehmen „Early Mover“-Vorteile generieren.
    Date: 2022–08
  15. By: Noriyuki Doi (Emeritus Professor and Visiting Researcher at Innovation System Research Center, Kwansei Gakuin University)
    Abstract: The rise of the sharing economy is affecting many aspects such as consumption pattern of goods and services, existing business fields and labor markets. The business has an influence on competition and public policies in the field and related industries as well. In particular, a platform’s network management, called as platform curation, is emphasized as a private regulation or self-regulation. It plays a key role in the sharing business, and suggests new and challenging perspectives, opportunities and policy issues. This paper focuses on curation, and suggests its major implications for research and public policy.
    Keywords: sharing economy, market failure, curation, self-regulation, co-regulation
    JEL: L41 L42 L43
    Date: 2022–09
  16. By: Rishab Bailey (XKDR Forum); Ajay Shah (XKDR Froum); Ameya Naik (eGovernments Foundation); Brinda Lashkari (eGovernments Foundation)
    Abstract: In May 2022, the Ministry of Electronics and Information Technology (MEITY) initiated consultations on a draft National Data Governance Framework Policy. In our comments to MEITY, we point out that while the policy may be well intentioned in promoting development of the Indian startup ecosystem, creating a restricted access platform may not be the best method of achieving such a goal. In addition to being dif- ficult to restrict downstream uses of data only to Indian entities, a restricted access platform could come at a cost to open data initiatives which enhance government accountability. In addition to suggestions directed at enhancing useability of the proposed data access platform an protecting against harm from unethical data usage, we also suggest methods to enhance the accountability and capacity of the institutional mechanisms envisaged under the framework.
    JEL: H83 H82 H4
    Date: 2022–06
  17. By: Frank van der Horst; Joshua Snell; Jan Theeuwes
    Abstract: ll banknotes have security features which are intended to help to determine whether a banknote is false or genuine. Typically however, the general public has limited knowledge of where on a banknote these security features can be found. Here we tested whether counterfeit detection can be improved with the help of salient cues, designed to guide bottom-up visuospatial attention. We also tested the influence of the participant’s a priori level of trust in the authenticity of the banknote. In an online study (N=422), a demographically diverse panel of Dutch participants distinguished genuine banknotes from banknotes with one (left- or right-sided) counterfeited security feature. Either normal banknotes (without novel design elements) or banknotes that contained a salient cue (a pink rectangular frame) were presented for 1s. To manipulate the participant’s level of trust, trials were administered in three blocks, whereby at the start of each block, participants were instructed that either one third, one half, or two thirds of the upcoming banknotes were counterfeit (though the true ratio was always 1:1). We hypothesized (i) that in the presence of a salient cue, counterfeits would be better detected when the cue was valid (whereby the location of the salient element matched the location of the counterfeited security feature) than when it was invalid; and (ii) that this effect would be stronger with lower trust. Our hypotheses were partly confirmed: counterfeit detection improved with valid cues and decreasing trust, but the level of trust did not modulate the cueing effect. As the overall detection performance was rather poor, we replicated the study with a sample of university students (N=66), this time presenting stimuli until response. While indeed observing better overall performance, all other patterns were replicated. Two lessons can be learned here. Firstly, as lower trust yields better authentication accuracy, central bankers may see merit in raising awareness about the existence of counterfeit banknotes. Secondly, our findings provide a proof of concept for the idea that bottom-up saliency can be used to aid banknote authentication.
    Keywords: decision-making, gist, vision, touch, authentication, banknotes, counterfeits
    JEL: E40 E41 E50 E58
    Date: 2021–06

This nep-pay issue is ©2022 by Bernardo Bátiz-Lazo. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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.