nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2022‒11‒21
27 papers chosen by

  1. Advances in Digital Currency Experimentation By Michelle Neal
  2. Islamic Fintech: Nascent and on the Rise By Mohamad Hud Saleh Huddin; Mark Lee; Mohd Sobri Mansor
  3. Analysis of the FinTech Landscape in the Philippines By Quimba, Francis Mark A.; Barral, Mark Anthony A.; Carlos, Jean Clarisse T.
  4. A Control Theoretic Approach to Infrastructure-Centric Blockchain Tokenomics By Oguzhan Akcin; Robert P. Streit; Benjamin Oommen; Sriram Vishwanath; Sandeep Chinchali
  5. Social Media and Newsroom Production Decisions By Julia Cagé; Nicolas Hervé; Béatrice Mazoyer
  6. Shannon entropy: an econophysical approach to cryptocurrency portfolios By Noe Rodriguez-Rodriguez; Octavio Miramontes
  7. Proof-Of-Work Consensus Under Exogenous Distress: Evidence from Mining Shocks in the Bitcoin Ecosystem By Stinner, Jona; Tyrell, Marcel
  8. Partagez ! Il en restera toujours quelque chose… By Valérian Guillier
  9. Tweeting for Money: Social Media and Mutual Fund Flows By Javier Gil-Bazo; Juan F. Imbet
  11. Understanding and Measuring Financial Inclusion in the Philippines By Corpus, John Paul; Debuque-Gonzales, Margarita
  12. Flexibilization and precarization of working conditions and labor relations in the perspective of app-based drivers By Jeová Torres Silva Júnior; Jailson Santana Carneiro; Patrick Wendell Barbosa Lessa; Carlos Leandro Soares Vieira
  13. Optimal Settings for Cryptocurrency Trading Pairs By Di Zhang; Qiang Niu; Youzhou Zhou
  14. Data Flex: On-Platform Organisations By Alvarez-Telena Sergio; Diez-Fernandez Marta
  15. Price dispersion in the rideshare industry : a study of the Mexico City market By Sullivan, Tom
  16. Using Online Vacancy and Job Applicants' Data to Study Skills Dynamics By Bennett, Fidel; Escudero, Verónica; Liepmann, Hannah; Podjanin, Ana
  17. Value for Money and Selection: How Pricing Affects Airbnb Ratings By Christoph Carnehl; Maximilian Schaefer; André Stenzel; Kevin Ducbao Tran
  18. Why Do Men Keep Swiping Right? Two-Sided Search in Swipe-Based Dating Platforms By Hernandez Senosiain, Patricio
  19. Ireland: Financial Sector Assessment Program-Technical Note on Anti-Money Laundering/Combating the Financing of Terrorism By International Monetary Fund
  20. Digitizing Cash Transfers to Remote Rural Populations : Challenges and Solutions from theExperience of Zambia By Hobson,Emma Sameh Wadie; Kilfoil,Craig Patrick; Martin,Andrea
  21. Duality between online and offline shopping in the age of Covid-19 What future for e-commerce in Algeria? By TEBACHE, Djamal; CHETBANI, Saida
  22. Considerations for the allocation of non-default losses by financial market infrastructures By Daniele Costanzo; Radoslav Raykov
  23. The Newsroom Dilemma By Ayush Pant; Federico Trombetta
  24. A la Recherche du Temps Perdu : Legal and Quantitative analysis of the First Documented Option Market - Paris 1844-1939 By Antoine Parent; Pierre-Charles Pradier
  25. Commodity currencies revisited: The role of global commodity price uncertainty By Laurent Ferrara; Aikaterina Karadimitropoulou; Athanasios Triantafyllou; Theodora Bermpei
  26. The Role of Gender in Agent Banking : Evidence from the Democratic Republic of Congo By Chamboko,Richard; Cull,Robert J.; Gine,Xavier; Heitmann,Soren; Reitzug,Fabian; Van Der Westhuizen,Morne
  27. Using Deep Learning to Find the Next Unicorn: A Practical Synthesis By Lele Cao; Vilhelm von Ehrenheim; Sebastian Krakowski; Xiaoxue Li; Alexandra Lutz

  1. By: Michelle Neal
    Abstract: Remarks at the Singapore FinTech Festival, Singapore.
    Keywords: FinTech; digital assets; payments
    Date: 2022–11–04
  2. By: Mohamad Hud Saleh Huddin (Malaysia Deposit Insurance Corporation); Mark Lee (Malaysia Deposit Insurance Corporation); Mohd Sobri Mansor (Malaysia Deposit Insurance Corporation)
    Abstract: Islamic fintech has emerged as a niche sector within the broader development of Islamic finance, and can be defined as 'technologically enabled financial innovation that could result in new business models, applications, processes or products with an associated material effect on financial markets, institutions, and the provision of Islamic financial services with observation of Shariah requirements' (adapted from the Financial Stability Board’s definition of fintech). The prospects for Islamic fintech are encouraging. Several reasons stand out, including the propitious demographics of a young and digitally savvy global Muslim population, potential contribution of digital Islamic social finance towards poverty alleviation, and increasing consumer demand for ethical financial products and services. Globally, more than 200 companies are involved in Islamic fintech, primarily from Asia, the Middle East and Europe. By a measure of collective activity among the Organisation of Islamic Cooperation’s (OIC) 57 member countries, Islamic fintech is nascent. At USD 49 billion, its size translates into 0.7% of the total global fintech transaction volume in 2020. However, this is expected to grow to USD 128 billion by 2025 (CAGR: 21%). Meanwhile, a global composite index assessed the Islamic fintech ecosystems of various countries. Jurisdictions from Southeast Asia (Malaysia, Indonesia), the Middle East (Saudi Arabia, the United Arab Emirates), and the United Kingdom were found to have the most favourable conditions. In Malaysia, Islamic finance is a key priority sector. Islamic banking has grown significantly and Malaysia is actively involved in the international issuance of Islamic bonds (Sukuk). In terms of Islamic fintech, technology firms as well as incumbent Islamic commercial banks are involved in providing Islamic digital financial services. Several factors have contributed to the growth of Islamic fintech in Malaysia. These include digital readiness (IT infrastructure, online and mobile banking penetration), clear regulatory arrangements, focused government support for development of the Islamic digital economy, as well as an established Islamic financial community. Emerging opportunities for Islamic fintech in Malaysia are to enable social finance and close financial inclusion gaps. On the other hand, the industry is confronted with key challenges. These include the lack of start-up funding, an inadequate local talent pool, low levels of financial and digital literacy among specific segments of society, and the need for more collaboration between incumbent Islamic banks and fintech companies. For Islamic deposit insurers and resolution authorities, Islamic fintech can help by improving operational efficiency and effectiveness in areas such as the management of Islamic deposit insurance funds, identification of Shariah noncompliance risks for better governance, reimbursement of Islamic deposits, and enhancing resolution processes for Islamic banks. For the broader Islamic financial industry, Islamic fintech is used among others, to support products such as Shariah compliant e-money, and the business of Islamic digital banking. This is essential to provide Islamic depositors and financial consumers with the assurance and availability of end-to-end Shariah compliant digital financial products and services, that meet their expectations concerning religious laws and ethical standards. In summary, this Fintech Brief seeks to raise awareness of Islamic fintech and in turn, foster its growth. The brief provides an overview of the global state of play, and explores Malaysia's experience in the regulation and development of Islamic fintech. It closes by highlighting potential uses of Islamic fintech for deposit insurance and bank resolution.
    Keywords: deposit insurance, bank resolution
    JEL: G21 G33
    Date: 2022–11
  3. By: Quimba, Francis Mark A.; Barral, Mark Anthony A.; Carlos, Jean Clarisse T.
    Abstract: FinTech in the Philippines has been gaining more attention in recent years, especially during the onset of the COVID-19 pandemic when lockdowns are prevalent and cashless payment methods are encouraged to limit exposure to health risks from face-to-face and cash-based transactions. Digital payments and digital engagements of both men and women have increased, and more and more bank and nonbank financial service providers have entered the digital space, providing more diversified financial products and services through various platforms. Despite these developments, however, the industry financial inclusion in the Philippines remains lagging behind compared to ASEAN neighbors. In addition, FinTech has faced concerns pertaining to the reliability and consistency not only of the systems but also of the regulations. With the financial sector being heavily disrupted by digitalization, there is more to look into than defining FinTech elements and considering it as just another service innovation. Defining the interplay across the stages of FinTech transformation does not seem to be well explored in the Philippines. This paper explores the state of the industry and investigates how to support the development of the ecosystem to ensure that FinTech helps in the achievement of the country’s development goals. This paper finds that the Philippines has a strong FinTech industry as indicated by an increasing number of FinTechs (particularly in payments, lending, and banking technology verticals) and increasing capitalization. The FinTech industry can support the country’s goals of financial inclusion but there needs to be an improvement in areas of availability of talent and credit for the sector. Comments to this paper are welcome within 60 days from the date of posting. Email
    Keywords: business models; financial literacy; financial inclusion; e-money; fintech; FinTech ecosystem; lending
    Date: 2021
  4. By: Oguzhan Akcin; Robert P. Streit; Benjamin Oommen; Sriram Vishwanath; Sandeep Chinchali
    Abstract: There are a multitude of Blockchain-based physical infrastructure systems, operating on a crypto-currency enabled token economy, where infrastructure suppliers are rewarded with tokens for enabling, validating, managing and/or securing the system. However, today's token economies are largely designed without infrastructure systems in mind, and often operate with a fixed token supply (e.g., Bitcoin). This paper argues that token economies for infrastructure networks should be structured differently - they should continually incentivize new suppliers to join the network to provide services and support to the ecosystem. As such, the associated token rewards should gracefully scale with the size of the decentralized system, but should be carefully balanced with consumer demand to manage inflation and be designed to ultimately reach an equilibrium. To achieve such an equilibrium, the decentralized token economy should be adaptable and controllable so that it maximizes the total utility of all users, such as achieving stable (overall non-inflationary) token economies. Our main contribution is to model infrastructure token economies as dynamical systems - the circulating token supply, price, and consumer demand change as a function of the payment to nodes and costs to consumers for infrastructure services. Crucially, this dynamical systems view enables us to leverage tools from mathematical control theory to optimize the overall decentralized network's performance. Moreover, our model extends easily to a Stackelberg game between the controller and the nodes, which we use for robust, strategic pricing. In short, we develop predictive, optimization-based controllers that outperform traditional algorithmic stablecoin heuristics by up to $2.4 \times$ in simulations based on real demand data from existing decentralized wireless networks.
    Date: 2022–10
  5. By: Julia Cagé (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR); Nicolas Hervé (INA - Institut National de l'Audiovisuel); Béatrice Mazoyer (Médialab - Médialab (Sciences Po) - Sciences Po - Sciences Po)
    Abstract: Social media affects not only the way we consume news, but also the way news is produced, including by traditional media outlets. In this paper, we study the propagation of information from social media to mainstream media, and investigate whether news editors' editorial decisions are influenced by the popularity of news stories on social media To do so, we build a novel dataset including a representative sample of all the tweets produced in French between August 1st 2018 and July 31st 2019 (1.8 billion tweets, around 70% of all tweets in French) and the content published online by 200 mainstream media outlets. We then develop novel algorithms to identify and link events on social and mainstream media. To isolate the causal impact of popularity, we rely on the structure of the Twitter network and propose a new instrument based on the interaction between measures of user centrality and "social media news pressure" at the time of the event. We show that story popularity has a positive effect on media coverage, and that this effect varies depending on the media outlets' characteristics, in particular on whether they use a paywall. Finally, we investigate consumers' reaction to a surge in social media popularity. Our findings shed new light on our understanding of how editors decide on the coverage for stories, and question the welfare effects of social media.
    Keywords: Internet,Information spreading,News editors,Network analysis,Social media,Twitter,Text analysis
    Date: 2022–05–31
  6. By: Noe Rodriguez-Rodriguez; Octavio Miramontes
    Abstract: Cryptocurrency markets have attracted many interest for global investors because of their novelty, wide online availability, increasing capitalization and potential profits. In the econophysics tradition we show that many of the most available cryptocurrencies have return statistics that do not follow Gaussian distributions but heavy--tailed distributions instead. Entropy measures are also applied showing that portfolio diversification is a reasonable practice for decreasing return uncertainty.
    Date: 2022–10
  7. By: Stinner, Jona; Tyrell, Marcel
    JEL: G10 D02 D41 D85
    Date: 2022
  8. By: Valérian Guillier (Scènes du monde, création, savoirs critiques - UP8 - Université Paris 8 Vincennes-Saint-Denis - INHA)
    Abstract: Sharing seems to have several meanings. It has been politically usefull for the free software and free culture movement against extension of intellectual property but is also reused — alongside with a change in the meaning of the word — by platforms exploiting user generated contents. The business models of these platforms do not rely on exclusivity on the intellectual property and therefore accept free licences and, as a result, weakens their political power. We endeavour to understand how sharing has become the driving force of the renewal of a ressource whose valorization resemble the extractivist models, and investigate what extractivism in the digital world could be.
    Abstract: Le partage, sur Internet, est polysémique. Il a notamment été mobilisé politiquement par le mouvement du libre dans sa lutte contre l'extension de la propriété intellectuelle mais fait l'objet d'un investissement nouveau — non sans un glissement sémantique — par les plateformes exploitant les contenus générés par les utilisateurs. Les modèles économiques de ces plateformes supportent l'absence d'exclusivité sur les droits de propriété intellectuelle et les licences libres qui perdent alors leur puissance politique. Nous explorons la manière dont le partage est devenu le moteur du renouvellement d'une ressource dont la valorisation s'apparente aux modèles extractivistes et explorons la piste d'un extractivisme dans le domaine numérique.
    Keywords: free software,free culture,platform,user generated contents,extractivism,sharing,partage,logiciel libre,culture libre,plateformes,contenus générés par les utilisateurs,extractivisme
    Date: 2020–11–18
  9. By: Javier Gil-Bazo; Juan F. Imbet
    Abstract: We investigate whether asset management firms use social media to persuade investors. Combining a database of almost 1.6 million Twitter posts by U.S. mutual fund families with textual analysis, we find that flows of money to mutual funds respond positively to tweets with a positive tone. Consistently with the persuasion hypothesis, positive tweets work best when they convey advice or views on the market and when investor sentiment is higher. Using a high-frequency approach, we are able to identify a short-lived impact of families' tweets on ETF share prices. Finally, we reject the alternative hypothesis that asset management companies use social media to alleviate information asymmetries by either lowering search costs or disclosing privately observed information.
    Keywords: social media, Twitter, persuasion, mutual funds, mutual fund, flows, machine learning, textual analysis
    JEL: G11 G23 D83
    Date: 2022–10
  10. By: Ferry Syarifuddin (Bank Indonesia); Toni Bakhtiar
    Abstract: With their various motivations, many central banks still develop CBDC to explore its potentials and the drawback of implementation. This research examines the macroeconomic and monetary policy consequences, then determine optimal CBDC design to support monetary policy strategy. First, this research wants to develop DSGE model to quantify macroeconomic and monetary policy consequences in implementing CBDC. The DSGE model is consist of seven sectors namely households, retail firms, wholesale firms, capital producing firms, banks, central bank, and government. Shock generator that used in this model is technology shock and the shock on Taylor rule of interest rate. Second, as we know the outcome of the consequences, we continue to determine optimal CBDC design using SWOT with purposive sampling meta-analysis approach and its implementation strategies. According to the simulation, CBDC could effectively maintain inflation through CBDC rate. Meanwhile, optimal CBDC design that could support monetary policy is retail and wholesale coverage, interest bearing (wholesale) and non-interest bearing (retail) remuneration, account-based and tokenbased payment system, traceable degree of anonymity, hybrid architecture, DLT ledger system, and domestic and cross-border scope.
    Keywords: CBDC, Optimal design, DSGE, SWOT, Monetary policy
    JEL: E42 E44 E52 E58 G21
    Date: 2021
  11. By: Corpus, John Paul; Debuque-Gonzales, Margarita
    Abstract: Financial inclusion can help curb poverty, reduce inequality, and potentially enhance productivity and long-term growth. However, empirical research on financial inclusion remains limited, particularly at the country level. To fill this gap, this paper conducts an empirical exploration of financial inclusion in the Philippines. Its specific objectives are to: (1) benchmark financial inclusion in the Philippines versus other countries in developing Asia; (2) capture stylized facts about financial inclusion in the country based on analysis of demand-side data; and (3) construct a subnational financial inclusion index that can be used, moving forward, to estimate the links of financial inclusion with economic growth, development, and financial stability. The Philippines leads comparator countries in terms of the enabling environment, has mixed performance in financial outreach, and lags in financial account ownership and usage. Less than 15 percent of adults in the country save money using a formal account, while less than a tenth use formal credit, among the lowest proportions in the region. In terms of stylized facts, we find that greater education, higher income, being female, being employed, and being older (up to a certain point) make financial inclusion, particularly formal account ownership and credit use, more likely. Fintech in the form of mobile money appears promising with seemingly the most equitable access among the different forms of financial inclusion, although account ownership remains scant and limited to more urbanized areas. Individuals with less education and those coming from lower-income households are more likely to be "involuntarily" excluded from the formal financial sector. To construct a subnational financial inclusion index, this paper makes use of supply-side data on outreach and usage of financial services in Philippine regions, with weights derived via principal component analysis. The computed regional index is positively associated with GDP per capita, literacy, and electricity access, and negatively associated with poverty incidence, in line with the demand-side analysis and reasonable expectations about the relationship between financial inclusion and development indicators. Comments to this paper are welcome within 60 days from the date of posting. Email
    Keywords: Financial inclusion; financial inclusion index
    Date: 2021
  12. By: Jeová Torres Silva Júnior (UFCA - Federal University of Cariri); Jailson Santana Carneiro (UFRPE - Universidade Federal Rural do Pernambuco); Patrick Wendell Barbosa Lessa (Universidade Federal do Cariri (UFCA)); Carlos Leandro Soares Vieira (Universidade Federal do Cariri (UFCA))
    Abstract: Purpose The challenges of the growth of the sharing economy are becoming more and more noticeable and urgent, especially concerning labor relations (e.g. uberization). The purpose of this paper is to understand what app-based drivers think of working conditions and labor relations. Design/methodology/approach The research was carried out in three stages: bibliographical and documental research, and two empirical research, a quantitative one with the application of a questionnaire in a sample of 54 respondents and another qualitative one using an interview script with ten drivers. For data analysis, the abductive method and the content analysis technique were used. Findings The results reveal they have an exhausting labor routine, by checking that they work more hours per week than those who have a formal job. They are driven mainly by the extra income and flexibility that digital platforms of the sector of shared private transportation can offer, although the costs intrinsic to the activity often affect their revenues significantly. Research limitations/implications The number of answers from women was very small, which hinders the analysis of the potential specificities of women app-based drivers. Future studies could focus on this public for a more precise analysis, to bring the discussion on gender to the working context of app-based drivers. Practical implications The authors' intention with the research reports was to make them relevant, leading to effective policies concerning working conditions and labor relations in the sharing economy, and to stimulate other surveys to understand the activity of an app-based driver of shared private transportation. Originality/value The authors' research and this article contribute to the discussion on new work relationships, motivations and (dis)satisfaction with the activity, from the perspective of app-based drivers.
    Keywords: Uberization,Flexibilization of work,Precarization of work,App-based drivers,Platform workers,Sharing economy
    Date: 2022–04–12
  13. By: Di Zhang; Qiang Niu; Youzhou Zhou
    Abstract: The goal of cryptocurrencies is decentralization. In principle, all currencies have equal status. Unlike traditional stock markets, there is no default currency of denomination (fiat), thus the trading pairs can be set freely. However, it is impractical to set up a trading market between every two currencies. In order to control management costs and ensure sufficient liquidity, we must give priority to covering those large-volume trading pairs and ensure that all coins are reachable. We note that this is an optimization problem. Its particularity lies in: 1) the trading volume between most (>99.5%) possible trading pairs cannot be directly observed. 2) It satisfies the connectivity constraint, that is, all currencies are guaranteed to be tradable. To solve this problem, we use a two-stage process: 1) Fill in missing values based on a regularized, truncated eigenvalue decomposition, where the regularization term is used to control what extent missing values should be limited to zero. 2) Search for the optimal trading pairs, based on a branch and bound process, with heuristic search and pruning strategies. The experimental results show that: 1) If the number of denominated coins is not limited, we will get a more decentralized trading pair settings, which advocates the establishment of trading pairs directly between large currency pairs. 2) There is a certain room for optimization in all exchanges. The setting of inappropriate trading pairs is mainly caused by subjectively setting small coins to quote, or failing to track emerging big coins in time. 3) Too few trading pairs will lead to low coverage; too many trading pairs will need to be adjusted with markets frequently. Exchanges should consider striking an appropriate balance between them.
    Date: 2022–10
  14. By: Alvarez-Telena Sergio; Diez-Fernandez Marta
    Abstract: The natural alignment between business and architecture within big techs has boosted their transformation (crucially, upon API-fication and synergies exploitation) compared to that in the rest of organisations. The efficiency gap is so large that even the latter fear the irruption of big techs in their own arenas. Nevertheless, organisations have lately lost control of their architectures. They have become a mix of services offered by big techs and orchestrated by external consultants. Such a dynamic has naturally led to a large convergence between architectures across industries in spite of their idiosyncratic differences. Hence, there is room for improvement through a transformation governance that optimally weighs both microeconomics and microservices. As neither of the fields is easy to master, such an improvement remains a greenfield. This paper proposes a novel data architecture paradigm, Data Flex, that helps organisations take control of their transformation journey by becoming platforms - i.e. unlocking convergence with big techs efficiency levels. Further, it surpasses the theory by having evolved Data Flex first instance for the last 7 years. Along that time, the authors gathered real examples that filled out a cube defined by a series of dimensions significant enough to assert the universal validity of their approach.
    Date: 2022–09
  15. By: Sullivan, Tom (Monash University)
    Abstract: Nascent and highly dynamic industries such as the rideshare industry have disrupted traditional industries and business models. The use of technology has allowed firms like Uber and Didi to compete over both consumers and workers on an increasingly sophisticated level. This paper explores the use of algorithmic pricing strategies employed by the rideshare industry and the impact of such strategies on the overall level of competition in the market. It uses the Mexico City, Mexico, rideshare industry as a case study. The paper shows that specific firms target specific consumers based on whether those consumers are informed or uninformed about other options in the market, and do so at specific times based on the level of demand in the market. The findings of the paper are relevant for both economic understanding of such markets as well as policy responses.
    Keywords: Rideshare ; Uber ; algorithm ; pricing ; competition ; consumer JEL Classification: D4 ; L1
    Date: 2022
  16. By: Bennett, Fidel; Escudero, Verónica; Liepmann, Hannah; Podjanin, Ana
    JEL: J20 J24
    Date: 2022
  17. By: Christoph Carnehl; Maximilian Schaefer; André Stenzel; Kevin Ducbao Tran
    Abstract: We investigate the impact of prices on ratings using Airbnb data. We theoretically illustrate two opposing channels: higher prices reduce the value for money, worsening ratings, but they increase the taste-based valuation of the average traveler, improving ratings. Results from panel regressions and a regression discontinuity design suggest a dominant value-for-money effect. In line with our model, hosts strategically complement lower prices with higher effort more when ratings are relatively low. Finally, we provide evidence that, upon entry, strategic hosts exploit the dominant value-for-money effect. The median entry discount of seven percent improves medium-run monthly revenues by three percent.
    Date: 2022–08–31
  18. By: Hernandez Senosiain, Patricio (University of Warwick)
    Abstract: In today’s love market, swipe-based dating platforms (SBDPs) such as Tinder or Bumble have a well-established presence, but novel platform features can add significant complexities to the user’s search problem in ways that have been largely under-studied in previous literature. This paper formulates a model of two-sided search within SBDPs, where agents with heterogeneous preferences seek multipleromantic partners whilst facing intertemporal action constraints. Using numerical methods, I approximate stationary equilibria and perform comparative statics onvarious exogenous parameters that help explain stylised empirical facts. Finally, agent-based simulations are used to asses the structure of stationary equilibria as well as its attainability under myopic best-response dynamics.
    Keywords: Optimal Search ; Two Sided Matching ; Agent-Based Modeling JEL Classification: C78 ; D83 ; C63
    Date: 2022
  19. By: International Monetary Fund
    Abstract: While domestic money laundering (ML) threats are well understood by the authorities, Ireland faces significant and increasing threats from foreign criminal proceeds. As a growing international financial center,1 Ireland is exposed to inherent transnational money laundering and terrorist financing (ML/TF) related risks. The ML risks facing Ireland include illicit proceeds from foreign crimes (e.g., corruption, tax crimes). Retail and international banks, trust and company service providers (TCSPs),2 lawyers, and accountants are medium to high-risk for ML, while virtual asset service providers (VASPs) pose emerging risks. Brexit, the recent move of international banks to Dublin, and the COVID-19 pandemic increased the money laundering risks faced by Ireland. The Central Bank of Ireland (Central Bank) nevertheless has demonstrated a deep and robust experience in assessing and understanding their domestic ML/TF risks; however, an increased focus on risks related to transnational illicit financial flows is required. A thematic risk assessment undertaken by the Anti-Money Laundering Steering Committee (AMLSC) of international ML/TF risks would enhance the authorities’ risk understanding and is key to effective response to the rapid financial sector growth. Introducing data analytics tools, including machine learning to leverage potentially available big data on cross-border payments, would allow for efficient detection of emerging risks. The results of this assessment should be published to improve the understanding of transnational ML/TF risks and feed into the anti-money laundering and combating the financing of terrorism (AML/CFT) policy priorities going forward.
    Date: 2022–10–21
  20. By: Hobson,Emma Sameh Wadie; Kilfoil,Craig Patrick; Martin,Andrea
    Abstract: There is currently a major focus on digitization within African countries, with the interest of,on the one hand, increasing efficiency and lowering the cost-of-service delivery, and on the other hand, increasingfinancial inclusion for excluded parts of the population. Zambia provides an important case study of digitization ofsocial protection transfers. Whilst Zambia is sparsely populated with remote rural populations often living up to100 km from the nearest town, making beneficiaries hard to reach with digital services, the country has successfullydemonstrated that cash transfers can be digitized for remote rural populations to varying extents, tailored to theirparticular context. This Discussion Note presents challenges faced and solutions found in digitizing cash transferpayments in Zambia, which may be of interest to other countries embarking on similar endeavors.
    Date: 2022–09–30
  21. By: TEBACHE, Djamal; CHETBANI, Saida
    Abstract: The main objective of this paper is to explain this major turning point in world trade, particularly in a context of the Covid-19 health crisis and confinement. In this study, we rely on the theory of uncertainty to justify consumer choices, and we look at the situation of e-commerce in Algeria. The obtained results predict a more intensive digital revolution, which requires an adaptation to this possible trend, especially for developing countries that are lagging far behind in popularizing the use of ICTs.
    Keywords: Digitalization, ICTs, Covid-19, e-commerce, Algeria.
    JEL: C5 D1 M1 O3
    Date: 2022–06–04
  22. By: Daniele Costanzo; Radoslav Raykov
    Abstract: Non-default losses of financial market infrastructures (FMIs) have gained attention due to their potential impacts on FMIs and FMI participants, and the lack of a common approach to address them. A key question is, who should absorb these losses?
    Keywords: Financial markets; Financial system regulation and policies
    JEL: G32 G33 G23 G28
    Date: 2022–11
  23. By: Ayush Pant; Federico Trombetta
    Abstract: Conventional wisdom suggests that competition in the modern digital environment is pushing media outlets towards early release of less accurate information. We show that this is not necessarily the case. We argue that two opposing forces determine the resolution of the speed-accuracy trade-off: preemption and reputation. More competitive environments may be more conducive to reputation building. Therefore, it is possible to have better reporting in a more (Internet-driven) competitive world. However, we show that the audience may be worse-off due to another consequence of the Internet – outlets’ better initial information. Finally, we show how a source may exploit the speed-accuracy trade-off to get “unverified facts” out to the audience quickly.
    JEL: D43 D83 L82
    Date: 2022
  24. By: Antoine Parent (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8 Vincennes-Saint-Denis, IXXI - Institut Rhône-Alpin des systèmes complexes - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - INSA Lyon - Institut National des Sciences Appliquées de Lyon - Université de Lyon - INSA - Institut National des Sciences Appliquées - Inria - Institut National de Recherche en Informatique et en Automatique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Pierre-Charles Pradier (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We provide the first ever quantitative analysis of pricing and profitability of option trading in Paris from 1843 to 1939 based on a data source featuring more than 75,000 option prices. Using a special case of the Black (1976) option pricing model, we show that, albeit options were consistently undervalued, the market was still profitable for all the parties. We prove that the exceptional longevity of the Paris options market was based on a 4-pillars market microstructure: (1.) systematic underpricing of cheap options to attract gamblers, (2.) administration of settlement price by the brokers' syndicate, (3.) parimutuel-like betting operation and safety thanks to (4.) a sophisticated risk management in the position-taking style which minimized actual clearing price manipulation.
    Keywords: Option pricing,financial risk management,betting markets,alternative investments
    Date: 2022–10
  25. By: Laurent Ferrara; Aikaterina Karadimitropoulou; Athanasios Triantafyllou; Theodora Bermpei
    Abstract: Exchange rates of commodity exporting countries, generally known as commodity currencies, are often considered to be driven by some specific commodity prices. In this paper, we show that the uncertainty common to a basket of commodity prices is also a significant driver of exchange rate dynamics for a panel of commodity exporting countries. In particular, a positive shock on global commodity price uncertainty leads to a short-run depreciation of the effective exchange rate in commodity currency countries, followed by a medium-term overshooting. We document that this pattern is specific to commodity currencies and is not visible on benchmark currencies like the euro or the U.S. dollar, the latter acting as a typical safe haven currency. We refer to this pattern as the “commodity uncertainty currency” property.
    Keywords: Commodity currencies, Uncertainty co-movement, Commodity prices, SVAR model
    JEL: F43 F31 C50
    Date: 2022
  26. By: Chamboko,Richard; Cull,Robert J.; Gine,Xavier; Heitmann,Soren; Reitzug,Fabian; Van Der Westhuizen,Morne
    Abstract: This paper uses a unique data set with 1.1 million customer transactions from a microfinanceinstitution in the Democratic Republic of Congo from 2017 to 2018. The paper provides evidence of assortative gendermatching in agent banking transactions, as clients prefer to transact with agents of their own gender. Female clientsshow a robust preference for female agents even when they are less available, particularly when making high-valuetransactions and when they have higher account balances. The underrepresentation of female agents may contribute to thepersistent gender gap in financial access and usage.
    Keywords: Gender and Development,Financial Sector Policy,Banks & Banking Reform,Inequality
    Date: 2020–10–21
  27. By: Lele Cao; Vilhelm von Ehrenheim; Sebastian Krakowski; Xiaoxue Li; Alexandra Lutz
    Abstract: Startups often represent newly established business models associated with disruptive innovation and high scalability. They are commonly regarded as powerful engines for economic and social development. Meanwhile, startups are heavily constrained by many factors such as limited financial funding and human resources. Therefore the chance for a startup to eventually succeed is as rare as ``spotting a unicorn in the wild''. Venture Capital (VC) strives to identify and invest in unicorn startups during their early stages, hoping to gain a high return. To avoid entirely relying on human domain expertise and intuition, investors usually employ data-driven approaches to forecast the success probability of startups. Over the past two decades, the industry has gone through a paradigm shift moving from conventional statistical approaches towards becoming machine-learning (ML) based. Notably, the rapid growth of data volume and variety is quickly ushering in deep learning (DL), a subset of ML, as a potentially superior approach in terms capacity and expressivity. In this work, we carry out a literature review and synthesis on DL-based approaches, covering the entire DL life cycle. The objective is a) to obtain a thorough and in-depth understanding of the methodologies for startup evaluation using DL, and b) to distil valuable and actionable learning for practitioners. To the best of our knowledge, our work is the first of this kind.
    Date: 2022–10

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.