nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2023‒02‒06
nineteen papers chosen by

  1. Financial inclusion, mobile money and regulatory architecture By Metzger, Martina; Were, Maureen; Pédussel Wu, Jennifer
  2. An Anatomy of Crypto-Enabled Cybercrimes By Lin William Cong; Campbell R. Harvey; Daniel Rabetti; Zong-Yu Wu
  3. Designing Digital Actor Engagement Platforms for Local High Streets: An Action Design Research Study By Christian Bartelheimer; C. Ingo Berendes; Philipp zur Heiden; Daniel Beverungen
  4. CBDC: Banking and Anonymity By Yuteng Cheng; Ryuichiro Izumi
  5. ई रुपी आणि अर्थकारण By BAGDE, RAKSHIT MADAN
  6. The payment landscape of B2C e-commerce marketplaces in Latin America and the Caribbean By Gayá, Romina
  7. Is online retail killing coffee shops? Estimating the winners and losers of online retail using customer transaction microdata By Relihan, Lindsay
  8. Information for Banking Efficiency in Africa: Evidence from Income Levels and Legal Origins By Asongu, Simplice; Odhiambo, Nicholas
  9. The stable in stablecoins By Garth Baughman; Francesca Carapella; Jacob Gerszten; David C. Mills
  10. The landscape of B2C e-commerce marketplaces in Latin America and the Caribbean By Lotitto, Estefanía; Díaz de Astarloa, Bernardo
  11. The Role of Experience in the Digital Age and Its Purpose in the Value Creation Process By Sakib, S M Nazmuz
  12. Mobile Applications for Government: A Framework for Evaluating Their Economic Impact By Johansen, Elias
  13. The Bank of Amsterdam and the limits of fiat money By Wilko Bolt; Jon Frost; Hyun Song Shin; Peter Wierts
  14. DEEP LEARNING AND TECHNICAL ANALYSIS IN CRYPTOCURRENCY MARKET By Stéphane Goutte; Viet Hoang Le; Fei Liu; Hans-Jörg Mettenheim, Von
  15. Consumer acceptance of the use of artificial intelligence in online shopping: evidence from Hungary By Szabolcs Nagy; Noemi Hajdu
  16. Financial Sanctions, SWIFT, and the Architecture of the International Payments System By Marco Cipriani; Linda S. Goldberg; Gabriele La Spada
  17. Penerapan M-Banking dalam Meningkatkan Jasa dan Layanan Perbankan di PT. Bank Tabungan Negara (Persero) Tbk. Kantor Cabang Padang By Putri, Ayunia; Marlius, Doni
  18. Is Capital Account Convertibility Required for the Renminbi to Acquire Reserve Currency Status? By Barry Eichengreen; Camille Macaire; Arnaud Mehl; Eric Monnet; Alain Naef
  19. Monetary policy and credit card spending By Francesco Grigoli; Damiano Sandri

  1. By: Metzger, Martina; Were, Maureen; Pédussel Wu, Jennifer
    Abstract: This paper discusses first the role of mobile money accounts to enhance financial inclusion towards vulnerable groups in developing countries in the light of recent empirical evidence. Second, we explore the role of regulation to address risks to consumers and the financial system arising from the use of mobile money accounts, a question which has not been thoroughly addressed in the literature. Although financial inclusion via mobile money accounts is increasing, the outreach to particular disadvantaged and poor groups is still limited. However, remittances and G2P payments might develop into game changers for financial inclusion of poor and vulnerable households. Many countries from Sub-Saharan Africa are outperformers in terms of use of mobile money accounts in comparison to developing countries in other regions. Strikingly, the empirical evidence suggests that the regulatory landscape was of strategic importance to unleash the developmental potential of mobile money networks and the crowding-in of formerly unbanked households. Regulation on consumer protection particularly is of strategic relevance for the lasting acceptance and smooth operation of mobile money services and sharing the benefits with disadvantaged and poor households. A lack of effective and convincing consumer safeguards in place could diminish the trust in mobile money services and subsequently their acceptance and use. As mobile money services involve similar risks as traditional banking services, similar rules should apply. In addition, there are risks arising from the particular technology for mobile money account holders and institutions of the financial sector, including DFS providers. To these risks belong hysteresis effects to the disadvantage of poor households due to the use of alternative data and biased algorithms as well as displacement effects in local traditional and digital financial services due to BigTech.
    Keywords: Mobile money, financial inclusion, regulation, consumer protection, digital financial services, Big Data, Sub-Saharan Africa
    JEL: D18 G18 G23 G51 G59
    Date: 2022
  2. By: Lin William Cong; Campbell R. Harvey; Daniel Rabetti; Zong-Yu Wu
    Abstract: While the advent of cryptocurrencies and digital assets holds promise for improving and disrupting financial systems by offering cheap, quick, and secure transfer of value, it also opens up new payment channels for cybercrimes. A prerequisite to solving a problem is understanding the nature of the problem. Assembling a diverse set of public, proprietary, and hand-collected data, including dark web conversations in Russian, we conduct the first detailed anatomy of crypto-enabled cybercrimes and highlight relevant economic issues. Our analyses reveal that a few organized ransomware gangs dominate the space and have evolved into sophisticated corporate-like operations with physical offices, franchising, and affiliation programs. Their techniques have also become more aggressive over time, entailing multiple layers of extortion and reputation management. Blanket restrictions on cryptocurrency usage may prove ineffective in tackling crypto-enabled cybercrime and hinder innovations. Instead, blockchain transparency and digital footprints enable effective forensics for tracking, monitoring, and shutting down dominant cybercriminal organizations.
    JEL: H56 K24 O30
    Date: 2023–01
  3. By: Christian Bartelheimer (Paderborn University); C. Ingo Berendes (Paderborn University); Philipp zur Heiden (Paderborn University); Daniel Beverungen (Paderborn University)
    Abstract: Digital platforms are intermediating entities that enable interactions between distinct but interdependent groups of actors in two- or multi-sided markets. Although platforms' management and economic effects have already been researched, the design knowledge on digital platforms as actor engagement ecosystems is scarce. We designed, implemented and evaluated DigiStreet—the first instantiation of a digital actor engagement platform for hybrid online-offline customer high street journeys that connects consumers with stores, service providers and restaurants and provides location-based advertising (LBA) via Bluetooth low-energy (BLE) beacons. Based on detailed field evidence from three interventions—including 150 SMEs and over 2, 300 citizens—we develop a nascent design theory for a new class of IT artefacts: digital actor engagement platforms for hybrid customer journeys in local high streets. Beyond the design knowledge, our study provides unique empirical insights into how digital actor engagement platforms impact actors in a high street and assesses the prospects and limitations of providing LBA via BLE beacons. Further research can build on our contributions to instantiate and improve the design of digital actor engagement platforms, to quantify and increase the efficacy of LBA on a population level and to explore the consequences of platform providers' actions for a platform's success.
    Keywords: digital platform; action design research; design theory; actor engagement; engagement platform; location-based advertising
    JEL: C71 D85 L22
    Date: 2022–06
  4. By: Yuteng Cheng (Bank of Canada); Ryuichiro Izumi (Department of Economics, Wesleyan University)
    Abstract: What is the optimal design of anonymity in a central bank digital currency (CBDC)? We examine this question in the context of bank lending by building a stylized model of anonymity in payment instruments. We specify the anonymity of payment instruments in two dimensions: The bank has no information about the entrepreneur’s investment, and the bank has less control over the entrepreneur’s profits. An instrument with higher anonymity may discourage the bank from lending, and thus, the entrepreneur strategically chooses payment instruments. Our analysis shows that introducing a CBDC with modest anonymity can improve welfare in one equilibrium, but can also destroy valuable information in bank lending, leading to inefficient lending in another equilibrium. Our results suggest that central banks should either make a CBDC highly anonymous or share CBDC data with banks to eliminate this bad equilibrium.
    Keywords: CBDC, Anonymity, Bank lending
    JEL: E42 E58 G28
    Date: 2023–01
  5. By: BAGDE, RAKSHIT MADAN (Late. Mansaramji Padole Arts College, Ganeshpur, Bhandara)
    Abstract: Hon'ble Prime Minister of India Shri Narendra Modi has started digital initiatives from time to time. In the last few years, we can see that a kind of digital revolution has taken place in India. Indian citizens have become more aware of digital payment methods which is improving the standard of living. Finance Minister Nirmala Sitharaman had announced in the budget that India will start issuing digital currency in the financial year 2023. On 2 August 2021, Prime Minister of India Shri Narendra Modi has launched a digital payment platform called e-RUPI Digital Platform. National Payments Corporation of India (NPCI) in collaboration with Department of Financial Services (DFS), National Health Authority (NHA), Ministry of Health and Family Welfare (MoHFW) and partner banks has launched an innovative digital solution called 'e-RUPI' The name has been given. Through this paper, what is e-rupee, its functions and its impact on the Indian economy will be studied.
    Date: 2022–12–30
  6. By: Gayá, Romina
    Abstract: This paper studies the digital payments landscape of B2C e-commerce marketplaces in Latin America and the Caribbean. It presents the main characteristics of different digital payment methods, as well as their advantages and disadvantages. It also examines how digital payments contribute to financial inclusion and it describes the global and regional trends and prospects. It presents the main findings of an exhaustive analysis of payment methods accepted by more than 550 transactional marketplaces in 33 countries in LAC. It also examines the main obstacles to development of digital payments in LAC, especially regarding cross-border e-commerce, and proposes some initiatives to address those constraints.
    Date: 2022–12–07
  7. By: Relihan, Lindsay
    Abstract: Is online retail a complement or substitute to local offline economies? This paper provides the first evidence that consumers use time saved from online retail to increase their trips for time-intensive services like coffee shops. I use new, detailed data on the daily transactions of millions of anonymized customers. I then estimate a discrete choice model of consumer trip choice, which embeds time use mechanisms and accounts for correlations in trip utility shocks. I show that the model matches key features of observed behaviour that are missed by more standard models, such as the disproportionate increase in trips to nearby coffee shops when consumers switch to online groceries. Model counterfactuals are used to forecast changes in future trip demand and outline strategies, which offline retailers can use to compete against online retail. For consumers, I find that the welfare gains from online grocery platforms go disproportionately to high-income consumers.
    Keywords: online; retail; time use; tips
    JEL: D12 J20 L81 R12
    Date: 2022–03–03
  8. By: Asongu, Simplice; Odhiambo, Nicholas
    Abstract: The study assesses how information sharing through mobile phones affects banking system efficiency in Africa with particular emphasis on income levels (middle-income versus low-income countries) and legal origins (English Common law versus French Civil law countries). The focus is on 53 African countries with data for the period 1996-2019, and the empirical evidence is based on Quantile regressions which enable the study to assess the nexus throughout the conditional distribution of banking system efficiency. The following findings are established: (i) mobile phone penetration promotes banking system efficiency in the 25th quantile and the median of banking system efficiency in low-income countries, while for middle-income countries, it is significant exclusively in the bottom quantile (i.e., 10th quantile). (ii) Except for the highest (i.e., 90th) quantile in which the effect of the mobile phone is not significant in English Common law countries, the impact is significant throughout the conditional distribution of banking system efficiency in Common law countries. (iii) As for French Civil law countries, the nexus is only significant in the median and highest (i.e., 90th) quantile of the conditional distribution of banking system efficiency. Policy implications are discussed.
    Keywords: Allocation efficiency; Information asymmetry; Mobile phones
    Date: 2022–12
  9. By: Garth Baughman; Francesca Carapella; Jacob Gerszten; David C. Mills
    Abstract: Stablecoins have garnered much attention as a key part of the emerging decentralized finance (or "DeFi") ecosystem, and as a potential way to pay for goods and services. Stablecoins facilitate trades on crypto exchanges, serve as the underlying asset for many crypto loans, and allow market participants to avoid inefficiencies stemming from converting back to fiat currency for crypto trades.
    Date: 2022–12–17
  10. By: Lotitto, Estefanía; Díaz de Astarloa, Bernardo
    Abstract: The digitization of economy, and particularly the e-commerce can encourage innovation and contribute to the process of digital transformation of micro, small and medium enterprises (MSME) through the implementation of digital technologies and new business models, which can improve the efficiency and productivity of companies beyond its effects on access to new markets. Despite potential gains, activity of online platforms implies risks and challenges in terms of antitrust regulation, data protection, cybersecurity, and market dynamic. Better quality of institutions and an effective judiciary system and a competitive business environment are associated with higher efficient of platforms. Data and evidence for the Latin America and the Caribbean (LAC) region remain scarce still. This paper analyzes data set of online marketplace activity in the region between 2019 and 2021. Besides, it describes the main characteristics of online platforms in the region, as well as their distribution across countries and the evolution of traffic during such period. These data also were combined with country-level indicators to study structural determinants of those marketplace activities.
    Date: 2022–12–15
  11. By: Sakib, S M Nazmuz
    Abstract: Advances in new technologies have disrupted the business environment with increased access to information and communication tools that cause a shift from traditional brick-and-motor business to online business models. These changes have impacted the way products and services are marketed. Importantly, creation of value in marketing has changed consistent with the live experience dynamic in the new business environment. The aim of the present evaluation, therefore, is to assess the potential of experiential marketing in the digital era in the process of value creation in online businesses. In the process, a mixed-methods research was conducted guided by a pragmatist epistemology and abductive logic in the evaluation of secondary qualitative and quantitative data sourced from online journal data repositories. Using descriptive and thematic analyses, the study demonstrated the capacity of experiential marketing in the development of a marketing strategy recognizing the importance of interaction between customers, and products or services, the mediating role of live experience on online customer behavior, particularly customer satisfaction and customer loyalty in the development of business-customer relationships.
    Date: 2021–12–29
  12. By: Johansen, Elias
    Abstract: An implementation strategy for a mobile app must be adjusted as the app progresses through different stages of maturity as it progresses through different stages of development as it progresses through different stages of maturity. A challenge that can arise when it comes to assessing the quality of mobile apps that are used by governments is the assessment of their quality. The reason for this is that they are progressing from the infancy stage of their use to the maturity stage of it. Through the use of a multi-item scale, this study intends to assess the quality of mobile apps offered by the governments that involve transactions in order to determine whether or not these apps are of a high quality. The results of a comprehensive review of scientific research that has been carried out by academic scholars and practitioners has led to the identification of a number of factors that influence the quality of mobile apps developed by government agencies based on a comprehensive review of scientific research. It was the purpose of our study to conduct a survey of fully functional mobile apps in order to develop a questionnaire that would be used to gather feedback from users based on an analysis of reviews and interviews with users in order to develop a survey of fully functional mobile apps. Following the quantitative analysis of the data, an appropriate scale was able to be developed based on the responses that had been received as a result of the quantitative analysis of the data. By evaluating the perceived value of government mobile applications, citizens can be able to evaluate the perceived quality of government mobile applications and the perceived value of government services. It has been found that, based on the analysis of the data, seven constructs can be used as a way of evaluating the quality of government apps on the basis of demand. A number of constructs are included in these constructs, such as user friendliness, transaction transparency, loading speeds, flexibility, complete information, trust and safety, as well as efficiency of the apps.
    Keywords: Mobile apps for economic development, government mobile apps, mobile apps for competitiveness, mobile apps for quality assessment, mobile apps for economic development
    JEL: L2 O1 O14 O32 O33 Q55
    Date: 2021–05–07
  13. By: Wilko Bolt; Jon Frost; Hyun Song Shin; Peter Wierts
    Abstract: Central banks can operate with negative equity, and many have done so in history without undermining trust in fiat money. However, there are limits. How negative can central bank equity be before fiat money loses credibility? We address this question using a global games approach motivated by the fall of the Bank of Amsterdam (1609–1820). We solve for the unique break point where negative equity and asset illiquidity renders fiat money worthless. We draw lessons on the role of fiscal support and central bank capital in sustaining trust in fiat money.
    Keywords: central banks, negative equity, fiat money, trust
    JEL: E42 E58 N13
    Date: 2023–01
  14. By: Stéphane Goutte (Université Paris-Saclay); Viet Hoang Le (Université Paris-Saclay); Fei Liu (IPAG Business School); Hans-Jörg Mettenheim, Von (IPAG Business School)
    Abstract: A large number of modern practices in financial forecasting rely on technical analysis, which involves several heuristics techniques of price charts visual pattern recognition as well as other technical indicators. In this study, we aim to investigate the potential use of those technical information (candlestick information as well as technical indicators) as inputs for machine learning models, especially the state-of-the-art deep learning algorithms, to generate trading signals. To properly address this problem, empirical research is conducted which applies several machine learning methods to 5 years of Bitcoin hourly data from 2017 to 2022. From the result of our study, we confirm the potential of trading strategies using machine learning approaches. We also find that among several machine learning models, deep learning models, specifically the recurrent neural networks, tend to outperform the others in time-series prediction.
    Keywords: Bitcoin Technical Analysis Machine Learning Deep Learning Convolutional Neural Networks Recurrent Neural Network, Bitcoin, Technical Analysis, Machine Learning, Deep Learning, Convolutional Neural Networks, Recurrent Neural Network
    Date: 2023–01–01
  15. By: Szabolcs Nagy; Noemi Hajdu
    Abstract: The rapid development of technology has drastically changed the way consumers do their shopping. The volume of global online commerce has significantly been increasing partly due to the recent COVID-19 crisis that has accelerated the expansion of e-commerce. A growing number of webshops integrate Artificial Intelligence (AI), state-of-the-art technology into their stores to improve customer experience, satisfaction and loyalty. However, little research has been done to verify the process of how consumers adopt and use AI-powered webshops. Using the technology acceptance model (TAM) as a theoretical background, this study addresses the question of trust and consumer acceptance of Artificial Intelligence in online retail. An online survey in Hungary was conducted to build a database of 439 respondents for this study. To analyse data, structural equation modelling (SEM) was used. After the respecification of the initial theoretical model, a nested model, which was also based on TAM, was developed and tested. The widely used TAM was found to be a suitable theoretical model for investigating consumer acceptance of the use of Artificial Intelligence in online shopping. Trust was found to be one of the key factors influencing consumer attitudes towards Artificial Intelligence. Perceived usefulness as the other key factor in attitudes and behavioural intention was found to be more important than the perceived ease of use. These findings offer valuable implications for webshop owners to increase customer acceptance
    Date: 2022–12
  16. By: Marco Cipriani; Linda S. Goldberg; Gabriele La Spada
    Abstract: Financial sanctions, alongside economic sanctions, are components of the toolkit used by governments as part of international diplomacy. The use of sanctions, especially financial, has increased over the last seventy years. Financial sanctions have been particularly important whenever the goals of the sanctioning countries were related to democracy and human rights. Financial sanctions restrict entities—countries, businesses, or even individuals—from purchasing or selling financial assets, or from accessing custodial or other financial services. They can be imposed on a sanctioned entity’s ability to access the infrastructures that are in place to execute international payments, irrespective of whether such payments underpin financial or real activity. This article explains how financial sanctions can be designed to limit access to the international payments system and, in particular, the SWIFT network, and provides some recent examples.
    Keywords: sanctions; Financial sanctions; cross-border payments; SWIFT; Russia-Ukraine war
    JEL: F3 F51 G15 G2
    Date: 2023–01–01
  17. By: Putri, Ayunia; Marlius, Doni
    Abstract: The purpose of this study was to determine the application of Mobile Banking in improving banking services and services at PT. Bank Tabungan Negara (Persero) Tbk. Kantor Cabang Padang. This study uses a qualitative method that explains descriptively by systematically detailing the data from the information obtained. The results of this study indicate that there is an increase in customers who ise mobile banking, because it make it easir and saves customers yime in conducting banking transactions
    Date: 2022–12–19
  18. By: Barry Eichengreen; Camille Macaire; Arnaud Mehl; Eric Monnet; Alain Naef
    Abstract: It is widely assumed that the renminbi (RMB) cannot acquire a meaningful place in central bank reserve portfolios without full liberalization of China’s capital account. We argue that the RMB can in fact develop into a consequential reserve currency in the absence of capital account convertibility. Trade and investment links can drive official use and accumulation despite limited access to Chinese financial markets. But this route to currency internationalization requires policy support. China must allow access to RMB through loans and People’s Bank of China (PBoC) currency swaps. It must ensure convertibility of RMB into US dollars on offshore markets. It must provide these RMB services at a stable and predictable price. Currency internationalization without full capital account liberalization thus requires the RMB to be backed by dollar reserves, which the PBoC consequently will continue to hold and use. Hence we do not foresee RMB internationalization as supplanting dollar dominance.
    Keywords: International Monetary System, Renminbi, International Reserve Currencies
    JEL: F31 F38 E58
    Date: 2022
  19. By: Francesco Grigoli; Damiano Sandri
    Abstract: We analyze the impact of monetary policy on consumer spending using confidential credit card data. Being available at daily frequency, these data improve the identification of the monetary transmission and allow for a more precise characterization of the transmission lags. We find that shocks to short-term interest rates affect spending much more rapidly than shocks to medium-term interest rates. We also document significant asymmetries in the effects of monetary policy. While interest rate hikes strongly curb spending-especially if coupled with reductions in stock prices reflecting pure monetary policy shocks-interest rate cuts appear unable to lift spending. Finally, we exploit the disaggregation of credit card data to examine the heterogeneous effects of monetary policy across spending categories and users' characteristics.
    Keywords: credit card spending, heterogeneity, monetary policy, transmission
    JEL: E21 E52
    Date: 2023–01

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