nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2023‒01‒09
forty-six papers chosen by
Bernardo Bátiz-Lazo
Northumbria University

  1. Gone with the fire: Market reaction to cryptocurrency exchange shutdown By Lee, Hanol; Wie, Dainn
  2. The value of decentralization using the blockchain By Reuter, Marco
  3. FinTech adoption and household risk-taking By Hong, Claire Yurong; Lu, Xiaomeng; Pan, Jun
  4. Who is Gambling? Finding Cryptocurrency Gamblers Using Multi-modal Retrieval Methods By Zhengjie Huang; Zhenguang Liu; Jianhai Chen; Qinming He; Shuang Wu; Lei Zhu; Meng Wang
  5. Epidemic exposure, financial technology, and the digital divide By Saka, Orkun; Eichengreen, Barry; Aksoy, Cevat Giray
  6. Social Media Influence Mainstream Media: Evidence from Two Billion Tweets By Julia Cagé; Nicolas Hervé; Béatrice Mazoyer
  7. Easier said than done: why Italians pay in cash while preferring cashless By Alberto Di Iorio; Giorgia Rocco
  8. Potential benefits and key risks of fiat-referenced cryptoassets By Hugh Ding; Natasha Khan; Bena Lands; Cameron MacDonald; Laura Zhao
  9. Misdirected Money Transfers in Korea By Sangjae Lee; Jeongeun Park
  10. Can Decentralized Finance Provide More Protection for Crypto Investors? By Agostino Capponi; Nathan Kaplan; Asani Sarkar
  11. Fintech Entry, Firm Financial Inclusion, and Macroeconomic Dynamics in Emerging Economies By Finkelstein-Shapiro, Alan; Mandelman, Federico S.; Nuguer, Victoria
  12. Digital Financial Services and Digital IDs: What Potential do They Have for Better Taxation in Africa? By Scarpini, Celeste; Santoro, Fabrizio; Munoz, Laura; Prichard, Wilson; Mascagni, Giulia
  13. Central Bank Digital Currencies, an Old Tale With a New Chapter By Michael D. Bordo; William Roberds
  14. An Introduction to Digital Tax Payment Systems in Low-and Middle-Income Countries By Arewa, Moyosore; Santoro, Fabrizio
  15. How Abundant Are Reserves? Evidence from the Wholesale Payment System By Gara Afonso; Darrell Duffie; Lorenzo Rigon; Hyun Song Shin
  16. Selection, Consumption, and New Music Exploration in an Online Social Network: A Dyadic Approach By Johannes Loh
  17. Buy Now Pay Later: market overview and outlook By Lorenzo Gobbi
  18. Paying in a blink of an eye: it hurts less, but you spend more By Marie-Claire Broekhoff; Carin van der Cruijsen
  19. Tax-Loss Harvesting with Cryptocurrencies By Lin William Cong; Wayne Landsman; Edward Maydew; Daniel Rabetti
  20. CBDC as Imperfect Substitute to Bank Deposits: a Macroeconomic Perspective By Perazzi, Elena; Bacchetta, Philippe
  21. Big data applications with theoretical models and social media in financial management By Taiga Saito; Shivam Gupta
  22. Environmental and Social Preferences and Investments in Crypto-Assets By Pavel Ciaian; Andrej Cupak; Pirmin Fessler; d’Artis Kancs
  23. Peer-to-peer solar and social rewards: Evidence from a field experiment By Stefano Carattini; Kenneth Gillingham; Xiangyu Meng; Erez Yoeli
  24. Trustful Voters, Trustworthy Politicians: A Survey Experiment on the Influence of Social Media in Politics By Aruguete, Natalia; Calvo, Ernesto; Scartascini, Carlos; Ventura, Tiago
  25. Can a Budget Recording Tool Teach Financial Skills to Youth?: Experimental Evidence from a Financial Diaries Study By Frisancho, Verónica; Herrera, Alejandro; Prina, Silvia
  26. International Remittances to Latin America and the Caribbean amid the COVID-19 Crisis: A Push for Digitalization? By Frisancho, Verónica; Parrado, Eric
  27. Crowdfunding as Entrepreneurial Investment: The Role of Local Knowledge Spillover By Filippo Marchesani; Francesca Masciarelli
  28. Social Networks, Gender Norms and Women's Labor Supply: Experimental Evidence Using a Job Search Platform By Afridi, Farzana; Dhillon, Amrita; Roy, Sanchari; Sangwan, Nikita
  29. Data Management at the Senegalese Tax Authority: Insights from a Long-term Research Collaboration By Czajka, Leo; Kondylis, Florence; Sarr, Bassirou; Stein, Mattea
  31. Digital Transformation Normalization: Using Managerial Actions to Effectively Execute Digital Business Strategy By Joep, Klopper; Kalgovas, Bradley; Hans, Borgman; Benlian, Alexander
  32. ETF construction on CRIX By Konstantin H\"ausler
  33. Ride-hailing versus traditional taxi services the experiences of taxi drivers in Lebanon By Yassin, Jad,; Rani, Uma,
  34. Federalism and Federalization on the Fintech Frontier By Knight, Brian
  35. The Unicorn Puzzle By Davydova, Daria; Fahlenbrach, Rudiger; Sanz, Leandro; Stulz, Rene M.
  36. Not My Usual Trip: Ride-hailing Characterization in Mexico City By Sabogal-Cardona, Orlando; Scholl, Lynn; Oviedo, Daniel; Crotte Alvarado, Amado; Bedoya-Maya, Felipe
  37. Predicting Chinese consumption series with Baidu By Zhongchen Song; Tom Coupé
  38. Understanding Factors Influencing Willingness to Ridesharing Using Big Trip Data and Interpretable Machine Learning By Li, Ziqi
  39. The “C” in crowdfunding is for co‑financing: exploring participative co‑financing, a complement of novel and traditional bank financing By Bock, Carolin; Siebeneicher, Sven; Rockel, Jens
  40. Different Motives for Holding Cash in France: an Analysis of the Net Cash Issues of the Banque de France By Franz Seitz; Lucas Devigne; Raymond de Pastor
  41. Economics of NFTs: The Value of Creator Royalties By Brett Hemenway Falk; Gerry Tsoukalas; Niuniu Zhang
  42. Making the Links between Ride-hailing and Public Transit Ridership: Impacts in Medium and Large Colombian Cities By Scholl, Lynn; Bedoya-Maya, Felipe; Sabogal-Cardona, Orlando; Oviedo, Daniel
  43. Who participates in the credit market during the COVID-19 pandemic? By Evangelos Charalambakis; Federica Teppa; Athanasios Tsiortas
  45. Financial Intermediation and Financial Crises By Diamond, Douglas
  46. The Anatomy of Three Scandals: Conspiracies, Beauty Contests and Sabotage in OTC Markets By Alexis Stenfors; Lilian Muchimba

  1. By: Lee, Hanol; Wie, Dainn
    Abstract: Disruption of exchanges frequently happens in the cryptocurrency market, though their potential impacts are relatively under-investigated. This study employs a 20-hour service interruption on October 15th, 2022, at Upbit, the dominant cryptocurrency exchange in Korea, as an exogenous shock of service interruption on the cryptocurrency market. Event study estimation shows that the change in abnormal returns depends on how important the specific exchange is to those cryptocurrencies. Cryptocurrencies predominantly traded on Upbit showed sharp reactions to both service disruption and recovery, while major currencies such as Bitcoin and Ethereum presented limited reactions to service interruption only.
    Keywords: Cryptocurrency,abnormal return,Event study,Network service disruption
    JEL: G12 G14 G15 G23
    Date: 2022
  2. By: Reuter, Marco
    Abstract: Although blockchain technology and cryptocurrencies have grown in popularity over the past years, there does not seem to be a consensus if they bring any value to economic interactions. In this paper, I argue that a fundamental value the blockchain provides is commitment. I develop a model of an entrepreneur, who can create a network for her users. She can decide to retain control of the network with centralized implementation through a regular company, or surrender control over the network with a decentralized implementation through the blockchain. Users that join the network are subject to a locked-in effect. I show that a decentralized implementation of the network is (i) preferred by the entrepreneur and (ii) a Pareto improvement, if and only if the size of the locked-in effect is sufficiently large.
    Keywords: Blockchain,Smart Contracts,Decentralization,Cryptocurrency,Commitment,Networks
    JEL: C70 D00 D2 D4 L2
    Date: 2022
  3. By: Hong, Claire Yurong; Lu, Xiaomeng; Pan, Jun
    Abstract: Using a unique FinTech data containing monthly individual-level consumption, investments, and payments, we examine how FinTech can lower investment barriers and improve risk-taking. Seizing on the rapid expansion of offline usages of Alipay in China, we measure individuals' FinTech adoption by the speed and intensity with which they adopt the new technology. Our hypothesis is that individuals with high FinTech adoption, through repeated usages of the Alipay app, would build familiarity and trust, reducing the psychological barriers against investing in risky assets. Measuring risktaking by individuals' mutual-fund investments on the FinTech platform, we find that higher FinTech adoption results in higher participation and more risk-taking. Using the distance to Hangzhou as an instrument variable to capture the exogenous variation in FinTech adoption yields results of similar economic and statistical significance. Focusing on the welfare-improving aspect of FinTech inclusion, we find that individuals with high risk tolerance, hence more risk-taking capacity, and those living in under-banked cities stand to benefit more from the advent of FinTech.
    Keywords: FinTech,Digital Payment,Financial Inclusion,Consumption,Risk Taking
    JEL: G11 G50
    Date: 2021
  4. By: Zhengjie Huang; Zhenguang Liu; Jianhai Chen; Qinming He; Shuang Wu; Lei Zhu; Meng Wang
    Abstract: With the popularity of cryptocurrencies and the remarkable development of blockchain technology, decentralized applications emerged as a revolutionary force for the Internet. Meanwhile, decentralized applications have also attracted intense attention from the online gambling community, with more and more decentralized gambling platforms created through the help of smart contracts. Compared with conventional gambling platforms, decentralized gambling have transparent rules and a low participation threshold, attracting a substantial number of gamblers. In order to discover gambling behaviors and identify the contracts and addresses involved in gambling, we propose a tool termed ETHGamDet. The tool is able to automatically detect the smart contracts and addresses involved in gambling by scrutinizing the smart contract code and address transaction records. Interestingly, we present a novel LightGBM model with memory components, which possesses the ability to learn from its own misclassifications. As a side contribution, we construct and release a large-scale gambling dataset at to facilitate future research in this field. Empirically, ETHGamDet achieves a F1-score of 0.72 and 0.89 in address classification and contract classification respectively, and offers novel and interesting insights.
    Date: 2022–11
  5. By: Saka, Orkun; Eichengreen, Barry; Aksoy, Cevat Giray
    Abstract: We ask whether epidemic exposure leads to a shift in financial technology usage and who participates in this shift. We exploit a dataset combining Gallup World Polls and Global Findex surveys for some 250,000 individuals in 140 countries, merging them with information on the incidence of epidemics and local 3G internet infrastructure. Epidemic exposure is associated with an increase in remote-access (online/mobile) banking and substitution from bank branch-based to ATM activity. Heterogeneity in response centers on the age, income and employment of respondents. Young, high-income earners in full-time employment have the greatest tendency to shift to online/mobile transactions in response to epidemics. These effects are larger for individuals with better ex ante 3G signal coverage, highlighting the role of the digital divide in adaption to new technologies necessitated by adverse external shocks.
    Keywords: epidemics,fintech,banking
    JEL: G20 G59 I10
    Date: 2021
  6. 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 (INA - Institut National de l'Audiovisuel, médialab - médialab (Sciences Po) - Sciences Po - Sciences Po)
    Abstract: Social media are increasingly influencing society and politics, despite the fact that legacy media remain the most consumed source of news. 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 around 70% of all the tweets produced in French between August 2018 and July 2019 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 the social media popularity of a story increases the coverage of the same story by mainstream media. 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 news production decisions in the digital age and the welfare effects of social media.
    Keywords: Internet, Information spreading, News editors, Network analysis, Social media, Twitter, Text analysis
    Date: 2022–07–30
  7. By: Alberto Di Iorio (Bank of Italy); Giorgia Rocco (Bank of Italy)
    Abstract: In this study we use data from the 2019 Study on the Payment Attitudes of Consumers in the Euro area (SPACE) to analyse the main drivers of payment choices at the point of sale (POS) in Italy. We find that transaction-related features are the most important drivers of payment choice at the POS, while individual consumer preferences play a minor role. We also document that consumers often pay in cash, even though they would prefer to use a different payment instrument, due to a lack of acceptance of alternative instruments by merchants, especially for low-value transactions. Finally, consumers’ digital skills are found to be a relevant factor in payment habits since they affect preferences and reduce the likelihood of cash usage, especially for those groups that tend to use it more, such as women and residents in the South.
    Keywords: payment habits, consumer choice, payment preferences, cash, payment cards, survey data, diary data
    JEL: D12 E58 G02
    Date: 2022–11
  8. By: Hugh Ding; Natasha Khan; Bena Lands; Cameron MacDonald; Laura Zhao
    Abstract: Cryptoassets that reference a national currency (commonly known as stablecoins) aim to peg their value to the reference currency and typically use a reserve of traditional financial assets to maintain the peg. The market value of these fiat-referenced cryptoassets has grown more than thirtyfold between early 2020 and mid-2022. We explore some of their potential benefits and key risks.
    Keywords: Digital currencies and fintech; Financial institutions; Financial markets; Financial system regulation and policies; Payment clearing and settlement systems
    JEL: E4 G2 G28 O3
    Date: 2022–12
  9. By: Sangjae Lee (Korea Deposit Insurance Corporation); Jeongeun Park (Korea Deposit Insurance Corporation)
    Abstract: Korea's fintech market is expanding with the rise in non-face-to-face financial transactions triggered by the development of mobile banking along with the COVID-19 pandemic. This Brief discusses the risk of misdirected money transfers and recent legislative changes in Korea mandating the Korea Deposit Insurance Corporation (KDIC) to assist in recovering such misdirected payments. Within the new scheme for supporting the recovery of misdirected payments, KDIC will have the powers to upon request by the payment sender, subrogate into its claim and in lieu of the latter attempt to collect the money through a payment order issued by the court. Upon recovery of the misdirected payment, the KDIC will pay out the amount to the sender after deducting relevant expenses incurred in making notifications and managing the Scheme.
    Keywords: deposit insurance, bank resolution
    JEL: G21 G33
    Date: 2022–11
  10. By: Agostino Capponi; Nathan Kaplan; Asani Sarkar
    Abstract: Several centralized crypto entities failed in 2022, resulting in the cascading failure of other crypto firms and raising questions about the protection of crypto investors. While the total amount invested in the crypto sector remains small in the United States, more than 10 percent of all Americans are invested in cryptocurrencies. In this post, we examine whether migrating crypto activities from centralized platforms to decentralized finance (DeFi) protocols might afford investors better protection, especially in the absence of regulatory changes. We argue that while DeFi provides some benefits for investors, it also introduces new risks and so more work is needed to make it a viable option for mainstream investors.
    Keywords: Crypto; cryptocurrencies; decentralized finance; DeFi; regulations; financial intermediation; fire sale
    JEL: G1 G2
    Date: 2022–12–21
  11. By: Finkelstein-Shapiro, Alan; Mandelman, Federico S.; Nuguer, Victoria
    Abstract: Financial inclusion is strikingly low in emerging economies. In only a few years, financial technologies (fintech) have led to a dramatic expansion in the number of non-traditional credit intermediaries, but the macroeconomic and credit-market implications of this rapid growth of fintech are not known. We build a model with a traditional banking system and endogenous fintech intermediary creation and find that greater fintech entry delivers positive long-term effects on aggregate output and consumption. However, greater entry bolsters aggregate firm financial inclusion only if it stems from lower barriers to accessing fintech credit by smaller, unbanked firms. Decreasing entry costs for fintech intermediaries alone has only marginal effects in the aggregate. While firms that adopt fintech credit are less sensitive to domestic financial shocks and contribute to a reduction in output volatility, greater fintech entry also leads to greater volatility in bank credit, thereby introducing a tradeoff between output volatility and credit-market volatility.
    JEL: E24 E32 E44 F41 G21
    Date: 2022–01
  12. By: Scarpini, Celeste; Santoro, Fabrizio; Munoz, Laura; Prichard, Wilson; Mascagni, Giulia
    Abstract: New digital technologies, such as Digital Financial Services (DFS) and digital IDs, are gaining momentum in Africa and lower income countries (LICs) more broadly. These technologies could have an impact on an increasingly digitised and IT-driven tax administration, since they hold potential to improve a number of core functions of a revenue authority. Yet, increasing evidence on existing technology in tax administration indicates a number of barriers, which are likely to mute these gains. Against this background, this paper summarises critical questions relevant to research and policy to make more effective use of digital technology in contexts of weak fiscal capacity and IT development: • What is the nature and potential of DFS and digital IDs in the specific context of LICs? • Given the scarce evidence relating to DFS, digital IDs and taxation, what can be learned from how existing data and technology is used in LICs’ revenue authorities? • How can tax administrations make the best use of DFS and digital IDs in the future? This Research in Brief is a summary of ICTD Working Paper 137.
    Keywords: Governance,
    Date: 2022
  13. By: Michael D. Bordo; William Roberds
    Abstract: We consider the debut of a new monetary instrument, central bank digital currencies (CBDCs). Drawing on examples from monetary history, we argue that a successful monetary transformation must combine microeconomic efficiency with macroeconomic credibility. A paradoxical feature of these transformations is that success in the micro dimension can encourage macro failure. Overcoming this paradox may require politically uncomfortable compromises. We propose that such compromises will be necessary for the success of CBDCs.
    JEL: E42 E58 N10
    Date: 2022–12
  14. By: Arewa, Moyosore; Santoro, Fabrizio
    Abstract: National tax administrations are increasingly investing in the digital facilities needed to make it possible for taxpayers to go online both to file their routine tax returns (e-filing) and remit the tax payments due (e-payment). These facilities potentially benefit both taxpayers and tax administrations. This paper first maps the landscape, explaining which filing and payment technologies are used for tax collection in Africa. We then examine why these technologies are not used to their full potential. Some constraints are on the demand side. These include taxpayers’ preferences for cash and in-person relations and low familiarity with and trust in digital technology. Other constraints lie in infrastructure deficits and broader political, regulatory, and institutional factors. Unlocking the full potential of e-filing and e-payment systems thus seems to depend on meeting several pre-conditions, including solid political will, sound regulatory frameworks, reliable payment infrastructure and adequate investment in human capital. However, there is relatively little reliable evidence of the actual effectiveness of e-services in tax collection. We conclude by outlining some research priorities.
    Keywords: Governance,
    Date: 2022
  15. By: Gara Afonso; Darrell Duffie; Lorenzo Rigon; Hyun Song Shin
    Abstract: Before the era of large central bank balance sheets, banks relied on incoming payments to fund outgoing payments in order to conserve scarce liquidity. Even in the era of large central bank balance sheets, rather than funding payments with abundant reserve balances, we show that outgoing payments remain highly sensitive to incoming payments. By providing a window on liquidity constraints revealed by payment behavior, our results shed light on thresholds for the adequacy of reserve balances. Our findings are timely, given the ongoing shrinking of central bank balance sheets around the world in response to inflation.
    JEL: E42 E44 E52 E58 G22
    Date: 2022–12
  16. By: Johannes Loh
    Abstract: We study peer influence in an online social network on a platform where consumers purchase music albums. They can follow their peers and become informed about their consumption choices. In particular, we are interested in how this affects consumers’ exploration of new music that exhibits unfamiliar attributes (e.g. artist, genre, or instrumentation). Our empirical analysis contains two parts: First, we analyze how the formation of new dyads in the network depends on consumer-peer similarities in their preference for certain album attributes. This affects music exploration because it determines which peer purchases consumers are exposed to. Second, conditional on the determinants of dyad formation, we investigate how within-dyad information flows affect consumers’ purchase decisions, and in particular their exploration of unfamiliar attributes. Our analysis produces three key findings: First, preference similarities between consumers and peers are the strongest predictor of the formation of dyads. This likely stifles consumers’ exploration of new music because it limits their exposure to unfamiliar attributes. Second, we find a strong positive peer effect of consumers observing peer purchases after the formation of a dyad. Third, this effect is stronger for albums from unfamiliar artists, but weaker for those that exhibit unfamiliar horizontal attributes (e.g. its genre). Together, this suggests that new music exploration in online social networks is limited and subject to nuance.
    Keywords: online social networks, consumption choices, peer influence, music consumption
    JEL: D12 D83 L82 L86
    Date: 2022
  17. By: Lorenzo Gobbi (Banca d'Italia)
    Abstract: The surge of digitization in the financial industry and in e-commerce has favoured the strong growth of Buy Now Pay Later (BNPL) operators, which traditionally grant short-term loans of a limited amount, allowing consumers to split the payment of a purchase into a variable number of interest-free instalments. After providing a general overview of the BNPL model and some statistics on market penetration, this paper describes the existing regulatory framework, in terms of both contracts and licences. It then considers the potential implications of rising inflation, and of the resulting increases in interest rates by various Central Banks, for the business models of BNPL operators, whose valuations have already decreased. Lastly, it discusses the need to protect consumers from inadvertently piling up excessive debt.
    Keywords: Buy Now Pay Later (BNPL), Fintech, Digital credit
    JEL: G23 G51
    Date: 2022–11
  18. By: Marie-Claire Broekhoff; Carin van der Cruijsen
    Abstract: Consumers have been switching from cash to electronic means of paying and have become increasingly fond of online shopping. The COVID-19 pandemic has accelerated these trends. What these trends imply for the pain of paying that consumers experience has barely been studied. As pain of paying can help prevent overspending, it is important to research this topic. We designed a detailed consumer survey to do so. Using this rich data on the Netherlands, we find that electronic payments – both online and offline – hurt less than cash payments. This holds especially for contactless payments and iDEAL payments, a frequently used online payment method in the Netherlands. Interestingly, we find this for older people in particular but not for teenagers. Furthermore, the pain of paying is positively related to the price of the product or service and slightly lower for a fun trip compared to grocery shopping. The pain of paying is relatively high for women, highly educated people, people without a partner, people who find it hard to make ends meet with their income, tightwads (i.e. frugal people), people who frequently check their payments account and people with a low level of financial literacy. On average, cash is perceived to be most helpful in preventing overspending, whereas contactless payments are the least helpful.
    Keywords: D12; D91; E42
    Date: 2022–12
  19. By: Lin William Cong; Wayne Landsman; Edward Maydew; Daniel Rabetti
    Abstract: We describe the landscape of taxation in the crypto markets, especially that concerning U.S. taxpayers, and examine how recent increases in tax scrutiny have led to changes in trading behavior by crypto traders. We predict under a simple theoretical framework and then empirically document that increased tax scrutiny leads crypto investors to utilize legal tax planning with tax-loss harvesting as an alternative to non-compliance. In particular, domestic traders increase tax-loss harvesting following the increase in tax scrutiny, and U.S. exchanges exhibit a significantly greater amount of wash trading. Additional findings suggest that broad-based and targeted changes in tax scrutiny can differentially affect crypto traders' preference for U.S.-based exchanges. We also discuss other gray areas for tax regulation related to new crypto assets such as Non-Fungible Tokens and Decentralized Finance protocols that further highlight the importance of coordinating tax policy and other regulations.
    JEL: G15 G18 G29 K29 K42 O16
    Date: 2022–12
  20. By: Perazzi, Elena; Bacchetta, Philippe
    Abstract: The impact of Central Bank Digital Currency (CBDC) is analyzed in a closed-economy model with monopolistic competition in banking and where CBDC is an imperfect substitute with bank deposits. The design of CBDC is characterized by its interest rate, its substitutability with bank deposits, and its relative liquidity. We examine how interest-bearing CBDC would affect the banking sector, public finance, GDP and welfare. Welfare may improve through three channels: seigniorage; a lower opportunity cost of money; and a redistribution away from bank owners. In our numerical analysis we find a maximum welfare improvement of 60 bps in consumption terms.
    Keywords: CBDC, Welfare, Substitutability
    JEL: E5
    Date: 2022–12–08
  21. By: Taiga Saito (Graduate School of Economics, The University of Tokyo); Shivam Gupta (Department of Information Systems, Supply Chain Management & Decision Support, NEOMA Business School)
    Abstract: This study presents big data applications with quantitative theoretical models in financial management and investigates possible incorporation of social media factors into the models. Specifically, we examine three models, a revenue management model, an interest rate model with market sentiments, and a high-frequency trading equity market model, and consider possible extensions of those models to include social media. Since social media plays a substantial role in promoting products and services, engaging with customers, and sharing sentiments among market participants, it is important to include social media factors in the stochastic optimization models for financial management. Moreover, we compare the three models from a qualitative and quantitative point of view and provide managerial implications on how these models are synthetically used along with social media in financial management with a concrete case of a hotel REIT. The contribution of this research is that we investigate the possible incorporation of social media factors into the three models whose objectives are revenue management and debt and equity financing, essential areas in financial management, which helps to estimate the effect and the impact of social media quantitatively if internal data necessary for parameter estimation are available, and provide managerial implications for the synthetic use of the three models from a higher viewpoint. The numerical experiment along with the proposition indicates that the model can be used in the revenue management of hotels, and by improving the social media factor, the hotel can work on maximizing its sales.
    Date: 2022–12
  22. By: Pavel Ciaian (European Commission - JRC); Andrej Cupak (National Bank of Slovakia and University of Economics in Bratislava); Pirmin Fessler (Oesterreichische Nationalbank, Economic Microdata Lab); d’Artis Kancs (European Commission - JRC)
    Abstract: Individuals invest in Environmental-Social-Governance (ESG)-assets not only because of (higher) expected returns but also driven by ethical and social considerations. Less is known about ESG-conscious investor subjective beliefs about crypto-assets and how these compare to traditional assets. Controversies surrounding the ESG footprint of certain crypto-asset classes – mainly on grounds of their energy-intensive crypto mining – offer a potentially informative object of inquiry. Leveraging a unique representative household finance survey for the Austrian population, we examine whether investors’ environmental and social preferences can explain cross- sectional differences in individual portfolio exposure to crypto-assets. We find a strong association between investors’ environmental and social preferences and the crypto-investment exposure but no significant relationship for the benchmarks of traditional asset classes such as bonds and shares.
    Keywords: Crypto-assets, investment portfolio, financial behaviour, financial literacy, environmental and social preferences
    JEL: D14 G11 G41
    Date: 2022–11
  23. By: Stefano Carattini; Kenneth Gillingham; Xiangyu Meng; Erez Yoeli
    Abstract: Observability has been demonstrated to influence the adoption of pro-social behavior in a variety of contexts. This study implements a field experiment to examine the influence of observability in the context of a novel pro-social behavior: peer-to-peer solar. Peer-to-peer solar offers an opportunity to households who cannot have solar on their homes to access solar energy from their neighbors. However, unlike solar installations, peer-to-peer solar is an invisible form of pro-environmental behavior. We implemented a set of randomized campaigns using Facebook ads in the Massachusetts cities of Cambridge and Somerville, in partnership with a peer-to-peer company. In the campaigns, treated customers were informed that they could share "green reports" online, providing information to others about their greenness. We find that interest in peer-to-peer solar increases by up to 30% when "green reports," which would make otherwise invisible behavior visible, are mentioned in the ads.
    Keywords: Peer to peer solar; pro-environmental behavior; social rewards; visibility; Facebook
    JEL: C93 D91 Q20
    Date: 2022–12
  24. By: Aruguete, Natalia; Calvo, Ernesto; Scartascini, Carlos; Ventura, Tiago
    Abstract: Recent increases in political polarization in social media raise questions about the relationship between negative online messages and the decline in political trust around the world. To evaluate this claim causally, we implement a variant of the well-known trust game in a survey experiment with 4,800 respondents in Brazil and Mexico. Our design allows to test the effect of social media on trust and trustworthiness. Survey respondents alternate as agents (politicians) and principals (voters). Players can cast votes, trust others with their votes, and cast entrusted votes. The players rewards are contingent on their preferred “candidate” winning the election. We measure the extent to which voters place their trust in others and are themselves trustworthy, that is, willing to honor requests that may not benefit them. Treated respondents are exposed to messages from in-group or out-group politicians, and with positive or negative tone. Results provide robust support for a negative effect of uncivil partisan discourse on trust behavior and null results on trustworthiness. The negative effect on trust is considerably greater among randomly treated respondents who engage with social media messages. These results show that engaging with messages on social media can have a deleterious effect on trust, even when those messages are not relevant to the task at hand or not representative of the actions of the individuals involved in the game.
    Keywords: Trust;Social media;Trustworthiness;Political polarization
    JEL: D72 D83 D91
    Date: 2021–07
  25. By: Frisancho, Verónica; Herrera, Alejandro; Prina, Silvia
    Abstract: We study the impact of a mobile app to record daily financial transactions, coupled with enumerator monitoring visits every two weeks, on youths' investment in financial literacy and financial behavior. The treatment led to a positive and statistically significant effect on financial literacy scores and greater awareness of market prices. Youth in the treatment group experienced significant improvements in access to credit. These effects persist eight months after the intervention is over.
    Keywords: Financial diaries;Financial literacy
    JEL: C93 D90 G41 G53 O12 O16
    Date: 2021–10
  26. By: Frisancho, Verónica; Parrado, Eric
    Abstract: Remittances constitute a significant safety net for millions of households in Latin America and the Caribbean (LAC). Consequently, changes in international transfers can be a crucial agent of transmission of the COVID-19 induced economic crisis from richer to poorer nations and from urban to rural areas. Relying on data on queries to the search engine Google between December 2018 and July 2021, this study looks at the evolution of demand for in-person versus digital international transfer services and evaluates if take-up rates of different types of service providers trace the initial drop and subsequent rebound of remittances. The recovery of remittances was accompanied by a modest and temporary increase in the interest in digital mechanisms for sending money to home countries, which is accompanied by lower demand for brick-and-mortar service providers.
    JEL: F24 G20 G5
    Date: 2021–12
  27. By: Filippo Marchesani; Francesca Masciarelli
    Abstract: This paper explores the role of local knowledge spillover and human capital as a driver of crowdfunding investment. The role of territory has already been studied in terms of campaign success, but the impact of territory on the use of financial sources like equity crowdfunding is not yet known. Using a sample of 435 equity crowdfunding campaigns in 20 Italian regions during a 4-year period (from 2016 to 2019), this paper evaluates the impact of human capital flow on the adoption of crowdfunding campaigns. Our results show that inbound knowledge in the region, measured in terms of ability to attract national and international students, has a significant effect on the adoption of crowdfunding campaigns in the region itself.
    Date: 2022–11
  28. By: Afridi, Farzana (Indian Statistical Institute); Dhillon, Amrita (King's College London); Roy, Sanchari (King's College London); Sangwan, Nikita (Indian Statistical Institute)
    Abstract: Using a cluster randomized control trial, we study the role of women's social networks in improving female labor force participation. In the first treatment arm, a hyper-local digital job search platform service was offered to a randomly selected group of married couples (non-network treatment) in low-income neighborhoods of Delhi, India. In the second treatment arm, the service was offered to married couples and the wife's social network (network treatment), to disentangle the network effect. Neither couples nor their networks were offered the service in the control group. Approximately one year after the intervention, we find no increase in the wife's likelihood of working in either treatment group relative to the control group. Instead, there is a significant improvement in their husbands' labor market outcomes, including the likelihood of working, work hours, and monthly earnings, while in contrast home-based self-employment increased among wives – both in the network treatment group. We argue that our findings can be explained by the gendered structure of social networks in our setting, which reinforces (conservative) social norms about women's (outside) work.
    Keywords: social networks, social norms, gender, job-matching platforms, employment
    JEL: J16 J21 J24 O33
    Date: 2022–11
  29. By: Czajka, Leo; Kondylis, Florence; Sarr, Bassirou; Stein, Mattea
    Abstract: As they increasingly adopt digital infrastructure, public administrations worldwide are increasingly collecting, generating and managing data. Empirical researchers are, at the same time, collaborating more and more with administrations, accessing vast amounts of data, and setting new research agendas. These collaborations have taken place in low-income countries in particular, where administrative data can be a valuable substitute for scarce survey data. However, the transition to a full-fledged digital administration can be a long and difficult process, sharply contrasting the common leap-frog narrative. Based on observations made during a five-year research collaboration with the Senegalese tax administration, this qualitative case study discusses the main data management challenges the tax administration faces. Much progress has recently been made with the modernisation of the administration’s digital capacity ,and adoption of e-filling and e-payment systems. However, there remains substantial scope for the administration to enhance data management and improve its efficiency in performing basic tasks, such as the identification of active taxpayers or the detection of various forms of non-compliance. In particular, there needs to be sustained investment in human resources specifically trained in data analysis. Recently progress has been made through creating – in collaboration with the researchers – a ‘datalab’ that now works to improve processes to collect, clean, merge and use data to improve revenue mobilisation.
    Keywords: Governance,
    Date: 2022
  30. By: Evgenii Zimin (National Research University Higher School of Economics); Maria Semenova (National Research University Higher School of Economics)
    Abstract: Bank de-branching is one of the key trends in banking sectors all over the world. This paper explores the conditions in which de-branching brings more profits to the bank. This issue is attracting considerable interest due to recent technological developments and increasing competition, including from fintech companies. Using the data from 84 Russian regions over the period of 2010–2020, we test whether the adoption of internet technologies and financial digital literacy (FDL) are positively related to bank de-branching and whether they add to bank de-branching efficiency in terms of bank profitability. We show that a higher degree of adoption of technological innovation and higher levels of FDL are positively related to bank de-branching. Furthermore, we observe that banks closing their branches in regions exhibiting higher levels of internet development and FDL gain more profits from de-branching. The results are robust to various model specifications
    Keywords: De-branching, Banks, Bank Profitability, Financial digital literacy, Innovations, Russia, Regions
    JEL: G21 G01 P2
    Date: 2022
  31. By: Joep, Klopper; Kalgovas, Bradley; Hans, Borgman; Benlian, Alexander
    Date: 2022
  32. By: Konstantin H\"ausler
    Abstract: Investments in cryptocurrencies (CCs) remain risky due to high volatility. ETFs are a suitable tool to diversify risk and to benefit from the growth of the whole CC sector. We simulate an ETF on the CRIX, the CRyptocurrency IndeX that maps the non-stationary CC dynamics closely by adapting its constituents weights dynamically. The simulation yields valuable insights into the mechanisms, costs and risks of this new financial product: i) although the composition of the CRIX ETF changes frequently (from 5 to 30 constituents), it remains robust in its core, as the weights of BTC and ETH are robust over time, ii) on average, a portion of 5.2% needed to be rebalanced at the rebalancing dates, iii) trading costs are low compared to traditional assets, iv) the liquidity of the CC sector has increased significantly during the analysis period, spreads occur especially for altcoins and increase by the size of the transactions. But since BTC and ETH are most affected by rebalancing, the cost of spreads remains limited.
    Date: 2022–11
  33. By: Yassin, Jad,; Rani, Uma,
    Abstract: Abstract.
    Date: 2022
  34. By: Knight, Brian (Mercury Publication)
    Abstract: Abstract not available.
  35. By: Davydova, Daria (Ecole Polytechnique Federale de Lausanne); Fahlenbrach, Rudiger (Ecole Polytechnique Federale de Lausanne and Swiss Finance Institute); Sanz, Leandro (Ohio State University); Stulz, Rene M. (Ohio State University and ECGI, Brussels)
    Abstract: From 2010 to 2021, 639 US VC-funded firms achieved unicorn status. We investigate why there are so many unicorns and why controlling shareholders give investors privileges to obtain unicorn status. We show that unicorns rely more than other VC-funded firms on organizational capital as well as network effects and the internet. Unicorn status enables startups to access new sources of capital. With this capital, they can invest more in organizational intangible assets with less expropriation risk than if they were public. As a result, they are more likely to capture the economies of scale that make their business model valuable.
    JEL: G24 G32 G34
    Date: 2022–11
  36. By: Sabogal-Cardona, Orlando; Scholl, Lynn; Oviedo, Daniel; Crotte Alvarado, Amado; Bedoya-Maya, Felipe
    Abstract: With a few exceptions, research on ride-hailing has focused on North American cities. Previous studies have identified the characteristics and preferences of ride-hailing adopters in a handful of cities. However, given their marked geographical focus, the relevance and applicability of such work to the practice of transport planning and regulation in cities in the Global South is minimal. In developing cities, the entrance of new transport services follows very different trajectories to those in North America and Europe, facing additional social, economic, and cultural challenges, and involving different strategies. Moreover, the determinants of mode choice might be mediated by social issues such as the perception of crime and the risk of sexual harassment in public transportation, which is often experienced by women in large cities such as Mexico. This paper examines ride-hailing in the Metropolitan Area of Mexico City, unpacking the characteristics of its users, the ways they differ from users of other transport modes, and the implications for urban mobility. Building on the household travel survey from 2017, our analytical approach is based on a set of categorical models. Findings suggest that gender, age, education, and being more mobile are determinants of ride-hailing adoption. The analysis shows that ride-hailing is used for occasional trips, and it is usually done for leisure and health trips as well as for night trips. The study also reflects on ride-hailings implications for the way women access the city.
    Keywords: Mexico;Ride-hailing;TNC
    JEL: J16 N76 O32
    Date: 2021–08
  37. By: Zhongchen Song; Tom Coupé (University of Canterbury)
    Abstract: There is a substantial literature that suggests that search behavior data from Google Trends can be used for both private and public sector decision-making. In this paper, we use search behavior data from Baidu, the internet search engine most popular in China, to analyze whether these can improve nowcasts and forecasts of the Chinese economy. Using a wide variety of estimation and variable selection procedures, we find that Baidu’s search data can improve nowcast and forecast performance of the sales of automobiles and mobile phones reducing forecast errors by more than 10%, as well as reducing forecast errors of total retail sales of consumptions goods in China by more than 40%. Google Trends data, in contrast, do not improve performance.
    Keywords: China, Baidu Index, Google Trends, forecasting, consumption.
    JEL: C53 E21 E27
    Date: 2022–12–01
  38. By: Li, Ziqi
    Abstract: Ridesharing, compared to traditional solo ride-hailing, can reduce traffic congestion, cut per-passenger carbon emissions, reduce parking infrastructure, and provide a more cost-effective way to travel. Despite these benefits, ridesharing only occupies a small percentage of the total ride-hailing trips. This study provides a reproducible and replicable framework that integrates big trip data, machine learning models, and explainable artificial intelligence (XAI) to better understand the factors that influence people's decisions to take or not to take a shared ride.
    Date: 2022–04–01
  39. By: Bock, Carolin; Siebeneicher, Sven; Rockel, Jens
    Date: 2022
  40. By: Franz Seitz; Lucas Devigne; Raymond de Pastor
    Abstract: The present paper analyzes the net cash issues of the Banque de France. It is divided in two parts. The first estimates cash demand functions for different denominational groups (small, medium, large). We find that many of the different motives for holding cash are present in the French case. In a second step we try to estimate the amounts used for transaction and store of wealth purposes, internal hoardings and foreign demand with indirect methods with a special focus on different variants of the so-called seasonal method. Our results reveal that in 2019 only around 15 % of the cumulated net issues are used for domestic transactions. Around 60 % are held outside France, either in other euro area countries or outside the euro area.
    Keywords: Cash, Banknotes, Net Issues, Seasonal Method.
    JEL: C22 E41 E58
    Date: 2022
  41. By: Brett Hemenway Falk; Gerry Tsoukalas; Niuniu Zhang
    Abstract: Non-Fungible Tokens (NFTs) promise to revolutionize how content creators (e.g., artists) price and sell their work. One core feature of NFTs is the option to embed creator royalties which earmark a percentage of future sale proceeds to creators, each time their NFTs change hands. As popular as this feature is in practice, its utility is often questioned because buyers, the argument goes, simply ``price it in at the time of purchase''. As intuitive as this argument sounds, it is incomplete. We find royalties can add value to creators in at least three distinct ways. (i) Risk sharing: when creators and buyers are risk sensitive, royalties can improve trade by splitting the risks associated with future price volatility; (ii) Dynamic pricing: in the presence of information asymmetry, royalties can extract more revenues from better-informed speculators over time, mimicking the benefits of ``dynamic pricing''; (iii) Price discrimination: when creators sell multi-unit NFT collections, royalties can better capture value from heterogeneous buyers. Our results suggest creator royalties play an important and sometimes overlooked role in the economics of NFTs.
    Date: 2022–12
  42. By: Scholl, Lynn; Bedoya-Maya, Felipe; Sabogal-Cardona, Orlando; Oviedo, Daniel
    Abstract: As transit ridership continues to fall in many cities across the globe, key policy debates continue around whether Uber and other ride-hailing services are contributing to this trend. This research explores the effects of the introduction of ride-hailing to Colombian cities on public transportation ridership using Ubers timeline as case study. We test the hypothesis that ride-hailing may either substitute or compete with public transit, particularly in cities with large transit service gaps in coverage or quality. Our analysis builds on historic transit ridership data from national authorities and uses a staggered difference-in-difference model that accounts for fixed effects, seasonality, socioeconomic controls, and the presence of integrated transport systems. Despite large reductions in transit ridership in most cities, our results suggest that Uber is not statistically associated with the observed drop in ridership. Moreover, consistent with evidence from previous research, public transit reforms implemented between 2007 and 2015 throughout Colombian cities appear to have contributed substantially to the declines in transit ridership observed across the country. Findings in this paper inform policy-targeted insights and contribute to current debates of the links between ride-hailing and public transit in cities in Latin America.
    Keywords: Transport Network Companies (TNC's);Latin America
    JEL: R40 H42 O33
    Date: 2021–10
  43. By: Evangelos Charalambakis; Federica Teppa; Athanasios Tsiortas
    Abstract: This paper provides new evidence on what determines the probability of the consumer’s decision to apply for credit as well as the probability of the consumer credit being accepted by financial institutions during the COVID-19 pandemic. The empirical analysis is based on microdata collected between April 2020 and January 2022 as part of the ECB Consumer Expectations Survey, a new online survey panel of Euro area consumers. We find that age, financial literacy, unemployment and degree of urbanization significantly affect both the application and the acceptance of credit, albeit in the opposite direction. We also document that the probability for credit application increases whereas the probability of credit approval decreases during the COVID-19 outbreak. Finally, we find that there is heterogeneity in the type of credit, particularly between secured and unsecured loans.
    Keywords: Consumer debt; Liquidity constraints; COVID-19 pandemic; Consumer Expectations Survey
    JEL: C23 D12 D14 G51
    Date: 2022–12
  44. By: Priscilla Oyebola Bello
    Abstract: It is a crystal clear fact that Nigeria is plagued with so many investment challenges and has a long way to go in the application of Information Technology in the real estate sector. Some of these challenges include and are not limited to inadequate land titling and cadastral survey, ineffective real estate financing, insurgency, widespread corruption and a collapsing economy. Nevertheless, there has been an increased investment appetite in the Nigerian Real Estate Market in recent years. Also, it is a well-known fact that technology is an integral part of life that has changed various traditional business models and industries. Hence, the Real estate industry is no exception, as Information Technology is changing the way the industry and the market operate. In this regard, one of the aspects of technology that one cannot overlook is the Metaverse. The concept of the Metaverse is gaining acceptance in the developed world, and every real estate investor should be introduced to what this is all about, why it is gaining popularity, and how it operates. Hence, this paper aims to provide an introduction to property investment and the Metaverse with the objective of evaluating the readiness of the Nigerian Real estate investment market to operate in the Metaverse.
    JEL: R3
    Date: 2022–01–01
  45. By: Diamond, Douglas (University of Chicago)
    Abstract: Nobel Lecture lecture slides
    Keywords: Banking; Financial crises
    JEL: E53 G21 G28
    Date: 2022–12–08
  46. By: Alexis Stenfors (University of Portsmouth); Lilian Muchimba (University of Portsmouth)
    Abstract: Until the Great Recession, the largely unregulated over-the-counter (OTC) markets had received little attention from compliance officers, regulators, and lawmakers. Perhaps more important than the lack of regulatory framework as such, the markets were widely perceived to be sufficiently large, liquid, efficient and competitive to withstand manipulative and collusive attempts by traders and banks. However, the status quo was radically altered in 2012, when it was revealed that major international banks had systematically manipulated the world’s most widely used interest rate benchmark. The ‘LIBOR scandal’ was quickly followed by a ‘Forex scandal’ and the discovery of grave misconduct in a range of other OTC benchmarks and markets. At the time of writing, government bonds traded on electronic trading platforms are under particular scrutiny. This paper draws on the concepts of conspiracies (Smith 1776), beauty contests (Keynes 1936) and sabotage (Veblen 1921) to reflect on why it took so long for the scandals to be discovered.
    Keywords: banks, beauty contest, conspiracies, financial regulation, LIBOR, manipulation, OTC markets, sabotage
    JEL: E43 F31 G14 G15 G18
    Date: 2022–12–15

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