nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2023‒02‒13
29 papers chosen by

  1. Determinants of interest in eNaira and financial inclusion information in Nigeria: role of Fintech, cryptocurrency and central bank digital currency By Ozili, Peterson K
  2. By Marwa Kerdouci; Assia Saadane
  3. Growth of the Vietnamese Fintech Industry and its Implications By Jung, Sunin
  4. Digital finance research and developments around the World: a literature review By Ozili, Peterson K;
  5. What are Central Bank Digital Currencies (CBDC)? An introduction to their main features, opportunities and potential risks By Sebastián Katz
  6. Digital Money and Remittances Costs in Central America, Panama, and the Dominican Republic By Ms. Alina Carare; Mr. Yorbol Yakhshilikov; Metodij Hadzi-Vaskov; Dmitry Vasilyev; Lavinia Franco; Justin Lesniak
  7. Curb Your Enthusiasm: The Fintech Hype Meets Reality in the Remittances Market By Tito Nícias Teixeira da Silva Filho
  8. Drivers of Digital Attention: Evidence from a Social Media Experiment By Guy Aridor
  9. Pattern Analysis of Money Flow in the Bitcoin Blockchain By Natkamon Tovanich; Rémy Cazabet
  10. Enhancing Digital G2P Transfer Capacities in the Asian LDCs By Nitin Madan; Alberto Isgut
  11. Instant Payments: Regulatory Innovation and Payment Substitution Across Countries By Mr. Tanai Khiaonarong; David Humphrey
  12. DAI Digital Art Index : a robust price index for heterogeneous digital assets By Lin, Min-Bin; Wang, Bingling; Bocart, Fabian Y.R.P.; Hafner, Christian M.; Härdle, Wolfgang K.
  13. Central Bank Digital Currencies: An Old Tale with a New Chapter By Michael D. Bordo; William Roberds
  14. An analysis of fake news and its effects on the economy and society By Heikkinen, Daan
  15. Advancing the security of record management of record management in education using blockchain technology By Olaniyan, A. Sekinat; Moradeyo, O. Motunrayo; Popoola, O. Peter; Araromi, A. Adekunle
  16. Stable streaming platforms: a cooperative game approach By Schlicher, L.; Dietzenbacher, Bas; Musegaas, Marieke
  17. The Anatomy of Banks’ IT Investments: Drivers and Implications By Mr. Maria Soledad Martinez Peria; Mr. Yannick Timmer; Mr. Nicola Pierri; Kosha Modi
  18. The Direction and Implications of the Content Industry in the Metaverse Era By Park, Ji Hye
  19. Tokenizing Startups, from Utility Tokens into Security Tokens By Amroush, Fadi
  20. The Current Status of the Webtoon Industry and Implications for Global Expansion By Park, Ji Hye
  21. The Rise of Digital Companies and Strategies: Case Studies in the U.S. and Korea By Cho, Jaehan; Frederick, Stacy; Jung, Sunin; Kim, Hanhin
  22. Economic impact of the digital revolution on the Asian economy By Oliver, Dr
  23. Technology and Tax: Adoption and Impacts of E-services in Rwanda By Santoro, Fabrizio; Lees, Adrienne; Carreras, Marco; Mukamana, Theonille; Hakizimana, Naphtal; Nsengyiumva, Yves
  24. Artificial Intelligence & Machine Learning in Finance: A literature review By Wassima Lakhchini; Rachid Wahabi; Mounime El Kabbouri; Casa Bp; Settat Hassan
  25. Monetary Policy and Credit Card Spending By Mr. Damiano Sandri; Mr. Francesco Grigoli
  26. Show Me the Money: Tracking Consumer Spending with Daily Card Transaction Data During the Pandemic By Mr. Serhan Cevik
  27. How Changes in Entrepreneurial Orientation can Explain Pivots during the Internationalization of Digital Technology-Based Born Globals By Bilal Ahmed Jathol; Véronique Favre-Bonté
  28. Nowcasting Stock Implied Volatility with Twitter By Thomas Dierckx; Jesse Davis; Wim Schoutens
  29. The Rise and Fall of Global Currencies over Two Centuries By Roger Vicquéry

  1. By: Ozili, Peterson K
    Abstract: The eNaira is the central bank digital currency of Nigeria. People who are interested in the eNaira and financial inclusion will seek information about eNaira and financial inclusion. Their interest in information about eNaira and financial inclusion will make it easier for them to adopt the eNaira and embrace other financial inclusion innovations such as financial technology (Fintech) and cryptocurrency. This paper investigates the determinants of interest in eNaira and financial inclusion information. Interest over time data were analyzed using descriptive statistics, correlation analysis and ordinary least squares (OLS) regression. The study also used the GMM and 2SLS regression methods for robustness. The findings of this study reveal that interest in Fintech and eNaira information are significant positive determinants of interest in financial inclusion information. Also, interest in financial inclusion is a significant positive determinant of interest in eNaira information. Furthermore, interest in Fintech information has a positive and significant correlation with interest in financial inclusion information. There is also a significant positive correlation between interest in central bank digital currency information and interest in Fintech information. The implication of the findings is that interest in information about new financial innovations, such as Fintech and eNaira, can stimulate interest in information about financial inclusion.
    Keywords: eNaira, Fintech, financial inclusion, central bank digital currency, cryptocurrency, information, innovation, innovation diffusion theory.
    JEL: G21 G23 G24
    Date: 2023
  2. By: Marwa Kerdouci (Université 08 mai 45 Guelma [Algérie]); Assia Saadane (Université 08 mai 45 Guelma [Algérie])
    Abstract: This study aims to highlight the initiatives undertaken by fintech companies in Côte d'Ivoire to access and use financial services, including by promoting financial inclusion. The study focused primarily on mobile money accounts and how they have already improved financial inclusion in Côte d'Ivoire, drawing on the analytical descriptive approach. The study found a dynamic ecosystem of players from different sectors, but access to finance remains the most difficult. On the other hand, Côte d'Ivoire is an emerging fintech platform, driven by the rapid adoption of « mobile money », where it has witnessed strong investor enthusiasm for digital finance, driven by favourable factors such as young people in the population, increasing the spread of smartphones, high-speed Internet and expanding populations without bank accounts.
    Keywords: fintech financial inclusion mobile money digital finance. JEL Classification Codes: E4 E5 F36 G2 G3, fintech, financial inclusion, mobile money
    Date: 2022–12–04
  3. By: Jung, Sunin (Korea Institute for Industrial Economics and Trade)
    Abstract: Among the Internet economy, e-commerce has recently emerged as the most dynamic sector. E-commerce GMV in Southeast Asia more than quadrupled from 5.5 billion USD in 2015 to 23 billion USD in 2018 with an annual growth rate of 62 percent over the period. Vietnam, along with Indonesia, is considered the fastest growing country in the e-commerce. The size of the Vietnamese e-commerce market sharply increased from 400 million in 2015 to 2.8 billion USD in 2018 and is expected to reach 15 billion USD in 2025. Besides e-commerce, the online media, online travel and online transportation and food delivery markets are promising, projected to expand significantly from 2.2 billion USD, 3.5 billion USD, and 500 million USD in 2018 to six billion USD, nine billion USD and two billion USD by 2025, respectively. The growth of the Internet economy including e-commerce is closely related to the demand for fintech. For example, digital payments are essential to the growth of the Internet economy. In Vietnam, only one in four e-commerce customers is shown to use digital payments because cash is traditionally favored and cash on delivery is widely accepted on major e-commerce platforms. However, this type of cash payment in e-commerce markets could cause friction between providers and consumers and incur additional costs. To this end, digital payment solutions are on the rise. In additional to digital payments, demand for various fintech solutions is expected to rise further, allowing for new types of transactions and investments as new business models based on the Internet and mobile have emerged.
    Keywords: Vietnam; fintech; financial services; e-commerce
    JEL: E42 G18 G23 G28 L84
    Date: 2023–01–08
  4. By: Ozili, Peterson K;
    Abstract: This paper presents a concise review of the existing digital finance research in the literature, and highlight some of the developments in digital finance around the world. The paper reached several conclusions. Firstly, it showed that digital finance has become an important part of modern finance and the major application of digital finance can be found in Fintech, embedded finance, open banking and decentralized finance, central bank digital currencies, among others. Secondly, it identified some international determinants of digital finance which includes the need for efficiency in financial services delivery, the need to achieve the United Nations sustainable development goals using existing digital technologies, the need to increase financial inclusion through digital financial inclusion and the need for efficient payments and payment settlement finality. The paper also finds that digital finance research is growing fast, and recent studies have investigated contemporary issues in digital finance that are relevant for policy and practice. Regarding the digital finance developments around the world, the paper shows that the Fintech and mobile money industries are the largest beneficiary of investments in digital finance with the total number of users of mobile money services surpassing 1 billion globally. Also, the paper predicts that the future of digital finance is to create a digital environment that permits the offering of all kinds of financial product and services that can be customized and personalized to meet the unique needs of all users on a single digital platform and without requiring any form of human assistance or intermediary. The paper then suggest some areas for future research which include the need for more research on how regulators can keep pace with emerging digital finance transformation, the need for more research on user information security and compliance, the need for more research on how to deal with bias caused by bad data, the need for more research on how to deal with algorithmic bias, and the need for more research on how to combine a risk-conscious culture with a higher risk appetite for digital finance transformation.
    Keywords: digital finance, artificial intelligence, machine learning, financial inclusion, fintech, access to finance, financial stability, economic growth, blockchain, central bank digital currency, robotics, cryptocurrency.
    JEL: G21 O32 O33
    Date: 2023
  5. By: Sebastián Katz (Central Bank of Argentina)
    Abstract: Digital transformation is provoking a real revolution in the payment´s landscape of many economies in the last few years. New technologies and the change in public´s habits are transforming not only the way payments are processed but the very modes of registering, storing and transferring value among economic agents. In that sense, a potential change in the forms of money as social convention or institution is also taking place. Many of these trends were accelerated by the pandemic. As a consequence of these developments, Central Banks started to actively explore the possibility of issuing their own digital monetary liabilities directed towards the general public, or retail CBDC (Central Bank Digital Currency). Many of them have progressed from conceptual research towards practical experimentation and a few jurisdictions have decided to implement it in the last period. This working paper presents a general overview of these efforts, the potential benefits that could derive from this initiative and the alternative designs and architectures under study oriented to minimize some of its risks.
    Keywords: Central Bank digital currencies, crytoassets, money, payment systems, stablecoins
    JEL: E42 E58 F42 G21
    Date: 2022–04
  6. By: Ms. Alina Carare; Mr. Yorbol Yakhshilikov; Metodij Hadzi-Vaskov; Dmitry Vasilyev; Lavinia Franco; Justin Lesniak
    Abstract: This paper investigates factors that predict variation in digital and non-digital remittance fees over time and across countries, exploring differences between CAPDR and other regions. The paper fills a void in the literature on how country- and corridor-specific factors relate to remittance fees at different levels of digitalization of the transaction mode. It also complements stylized facts and regression analysis with a survey analysis of the CAPDR authorities’ views on the latest developments, possibilities, and risks related to digital remittances with a view to gauging the authorities’ potential role in further reducing the cost of cross-border payments more generally and remittances fees in particular. The paper finds a clear trend of declining remittance fees across countries and at any level of digitalization, albeit they remain higher for CAPDR countries relative to non-CAPDR countries. More competition, financial and digital development in receiving countries—such as debit/credit card ownership or bank branch penetration—are associated with lower remittance fees, especially in CAPDR. The surveyed authorities actively explore the use of digital money to advance domestic payment systems, expedite financial inclusion, and lower remittances fees, yet see considerable risks, especially for preserving monetary sovereignty in CAPDR.
    Keywords: Digital money; cryptocurrency; stablecoin; remittances
    Date: 2022–12–02
  7. By: Tito Nícias Teixeira da Silva Filho
    Abstract: Fintech has become one of the most popular topics among policymakers and experts. It usually comes with the qualifier “disruptive”. Thus, the hype is easy to understand: fintech would upend the financial system due to its disruptive nature, as it would allow financial services to be completed faster, cheaper, and more efficiently. Indeed, many have predicted that the remittances market was on the verge of being disrupted as remittances are considered too costly while remittance service providers inefficient, opaque, and outdated. Therefore, there seems to be no better setting for assessing the allegedly disruptive effects of fintech. Against that background, this paper investigates how those predictions have fared so far. Contrary to expectations, it found that instead of disrupting incumbents fintechs have increasingly been entangled with them. Therefore, not only there is no evidence of disruption, but it is unlikely to occur in the foreseeable future. Even so, the paper argues that fintechs play an important role in the remittances market.
    Keywords: fintech; disruptive; bitcoin; blockchain; mobile money; remtech; remittances costs; financial inclusion; innovation.
    Date: 2022–12–02
  8. By: Guy Aridor
    Abstract: I study demand for social media services by conducting an experiment where I monitor how participants spend time on digital services and shut off access to Instagram or YouTube on their mobile phones. I characterize how participants substitute their time during and after the restrictions, which motivates estimating a model of time usage with inertia. I apply the substitution patterns observed during the restriction period and implied by the model with and without inertia to a relevant market definition exercise to conclude that relevant markets may be larger than those considered by regulatory authorities for social media applications.
    Keywords: social media, attention markets, field experiment, relevant markets
    JEL: L00 L40 L86
    Date: 2022
  9. By: Natkamon Tovanich (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, X - École polytechnique); Rémy Cazabet (DM2L - Data Mining and Machine Learning - LIRIS - Laboratoire d'InfoRmatique en Image et Systèmes d'information - UL2 - Université Lumière - Lyon 2 - ECL - École Centrale de Lyon - 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 - CNRS - Centre National de la Recherche Scientifique, LIRIS - Laboratoire d'InfoRmatique en Image et Systèmes d'information - UL2 - Université Lumière - Lyon 2 - ECL - École Centrale de Lyon - 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 - CNRS - Centre National de la Recherche Scientifique, UCBL - Université Claude Bernard Lyon 1 - Université de Lyon, 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)
    Abstract: Bitcoin is the first and highest valued cryptocurrency that stores transactions in a publicly distributed ledger called the blockchain. Understanding the activity and behavior of Bitcoin actors is a crucial research topic as they are pseudonymous in the transaction network. In this article, we propose a method based on taint analysis to extract taint flows-dynamic networks representing the sequence of Bitcoins transferred from an initial source to other actors until dissolution. Then, we apply graph embedding methods to characterize taint flows. We evaluate our embedding method with taint flows from top mining pools and show that it can classify mining pools with high accuracy. We also found that taint flows from the same period show high similarity. Our work proves that tracing the money flows can be a promising approach to classifying source actors and characterizing different money flow patterns.
    Keywords: Bitcoin, Money flow, Taint analysis, Graph embeddings
    Date: 2022–11–08
  10. By: Nitin Madan (Consultant, Macroeconomic Policy and Financing for Development Division of ESCAP); Alberto Isgut (Economic Affairs Officer, Macroeconomic Policy and Financing for Development Division of ESCAP)
    Abstract: In response to the COVID-19 pandemic, globally, there has been a rapid scale up of Government-to-Person (G2P) payments, especially digital cash transfers via mobile money agents and e-wallets. Many least developed countries (LDCs) have relied on robust mobile money agent networks, and high levels of mobile connectivity and ownership which enable G2P transactions. Such transfers are particularly advantageous in emergency situations like the COVID-19 pandemic as they allow for digital payments to take place in situations of social distancing and lockdowns. Digital payments can offer multiple benefits to various stakeholders, including governments, recipients, and service providers. Digital payments are a driver of financial inclusion, with payments often serving as a gateway to account ownerships and access to savings and loan products. Furthermore, evidence suggests that shifting government payments to digital platforms results in substantial government savings for cash transfer programmes. For example, in 2018, the Government of India estimated that using digital payments for social cash transfers resulted in savings of over $12.7 billion (Pazarbasioglu and others, 2020). Many countries, including LDCs in Asia, have started to strengthen and improve their G2P cash transfer systems. In response to the COVID-19 pandemic, 1, 414 social protection measures have been either planned or implemented across 222 countries or territories as of December 2021. These included various social assistance, social insurance, and labor market measures. Social assistance measures constituted 55 per cent of such measures on average (in East Asia and Pacific, it is higher at 61 per cent and South Asia, it is at 70 per cent) and within that, 42 per cent were cash transfers (Gentilini and others, 2020). The capacity of countries to manage G2P transfers effectively as well as to ensure inclusion, especially of informal workers, has become more important in light of the use of cash transfers as a policy response to the pandemic. Lessons from the rapid scale-up of G2P systems in various countries suggest three building blocks for a system: a unique ID (preferably digital with biometrics), socio-economic databases that are linked to the unique ID, and a channel for digital delivery. This paper reviews the three building blocks in eight Asian LDCs – Afghanistan, Bangladesh, Bhutan, Cambodia, the Lao People’s Democratic Republic, Myanmar, Nepal, and Timor-Leste – and discusses measures that can enhance the capacity of these countries. It also looks at whether the reviewed LDCs offer any lessons for others in the region. The paper also reviews the regulatory frameworks for digital payments and digital delivery channels in the reviewed LDCs.
    Keywords: government-to-person (G2P) payments, Asian least developed countries, COVID-19 pandemic, social cash transfers, mobile money
    JEL: O38
    Date: 2022–12
  11. By: Mr. Tanai Khiaonarong; David Humphrey
    Abstract: Instant, or fast, payments are credit transfers completed and settled within seconds or minutes. They have low costs, reduce payment risk, and have significantly replaced the use of cash, cards, or check and direct debit payments. We note the role played by regulators in promoting instant payments and identify instances of significant payment instrument substitution across 12 advanced and emerging market economies. This substitution reflects the realized demand for attributes offered by instant payments. As these attributes are quite similar to those for CBDC, the demand for retail CBDC (if issued) may be less compelling.
    Keywords: Instant payments; payment substitution; regulatory innovation; instant payment; payment risk; direct debit payment; payment share; Payment systems; Europe
    Date: 2022–11–18
  12. By: Lin, Min-Bin; Wang, Bingling; Bocart, Fabian Y.R.P.; Hafner, Christian M. (Université catholique de Louvain, LIDAM/ISBA, Belgium); Härdle, Wolfgang K.
    Abstract: The big bang of non-fungible tokens (NFTs) has caused the birth of a brand new era for digital art. NFTs, driven by blockchain and smart contracts, provide both artists and art collectors an unprecedented marketplace which is equipped with more security, flexibility, publicity, and freedom to monetize. Unlike the conventional art market, NFT art market trades works of art in rapid succession and has no sluggish business cycle. Yet, the emergence of such a market has been considered to be packed with speculation and economic uncertainty.
    Keywords: Non-fungible token ; NFT ; blockchain technology ; digital art ; hedonic regression ; index construction ; robustness
    JEL: C14 C43 C51 G10 Z11
    Date: 2022–11–18
  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.
    Keywords: banknotes; central banks; digital currencies; monetary systems
    JEL: E42 E58 N10
    Date: 2022–12–18
  14. By: Heikkinen, Daan
    Abstract: It was once possible to spread untruths and distortions of history and fact in the form of untruths and distortions of history and facts through word of mouth, manuscripts. However, today with the use of modern technology, it is possible to spread fake news to the point that it is affecting the economy and society as a whole. There is no doubt that fake news is impacting the economy inadvertently, but it also has a detrimental effect on people's lives, which makes the phenomenon even more dangerous today. With the advent of digital media, fake news and information of a false or misleading nature has been made more accessible, and this has led to the democratization of false news and misleading information. The advancement of technology, even a few decades ago, made it so difficult to produce something that required a large investment to produce it, whether it was access to printing presses, studios, or internet broadcasting, and now, due to advances in technology, we are able to do it so easily. In recent years, fake news has increased in prevalence, especially with the rise of social media platforms, such as the Facebook News Feed. There is a growing concern about the spread of this misinformation which is gradually affecting mainstream media outlets as well. There have been studies that indicate fake news distribution is strongly linked to a number of factors, including political polarization, post-truth politics, motivated reasoning, confirmation bias, and social media algorithms, among others, that have profound effects on the economy and society in general.
    Keywords: Fake news, impact of fake news on economy, fake news and society, fake news and economic sectors
    JEL: D0 E26 F6 F61 F62 O1 P26
    Date: 2021–03–12
  15. By: Olaniyan, A. Sekinat; Moradeyo, O. Motunrayo; Popoola, O. Peter; Araromi, A. Adekunle
    Abstract: Blockchain technology has gained considerable attention due to its unique features including decentralization, security, reliability, and data integrity. Despite this, much is yet to be known about the current state of knowledge and practice regarding using blockchain technology in education. This paper highlight the use cases of blockchain technology in Record management, discuss the major components of Block-chain-based Educational Record management, and then propose a system architecture for advancing the security of result/record database in education using a consortium system to create certificate records on the network. Comparison to related work has shown that block-chain-based record management offers better possibilities for advancing the security of student database record management and transferring information, certificate, or credentials at lesser cost and time.
    Keywords: blockchain, educational technology, decentralized Block-certs, consortium
    Date: 2023
  16. By: Schlicher, L.; Dietzenbacher, Bas (RS: GSBE other - not theme-related research, QE Math. Economics & Game Theory); Musegaas, Marieke (Dept. of Advanced Computing Sciences, RS: FSE DACS Mathematics Centre Maastricht, RS: FSE DACS)
    Abstract: Problem definition: Streaming platforms such as Spotify are popular media services where content creators may offer their content. Because these platforms operate in a highly competitive market, content creators may leave the platform and join elsewhere. This paper studies conditions under which content creators have no incentives to leave the platform and thus stability can be preserved. Methodology/results: We introduce a stylized model for streaming platform situations and associate these situations with a cooperative game. We focus on the (non)emptiness of the core to analyze the stability of the streaming platforms. It turns out that both stable and unstable streaming platforms exist. We show that for streaming platforms operating in a market where users have completely opposite streaming behavior, stability cannot always be preserved. However, in markets where users are more similar in their streaming behavior, stability can be preserved. We further analyze the stability of streaming platforms by means of numerical experiments. Our results indicate that stability of streaming platforms generally is a delicate matter. Managerial implications: Streaming platforms are more likely to be stable in markets where users are similar in their streaming behavior. To avoid that content creators leave the platform, it is therefore recommended to focus on particular market segments where these similarities occur.
    JEL: C71
    Date: 2023–01–26
  17. By: Mr. Maria Soledad Martinez Peria; Mr. Yannick Timmer; Mr. Nicola Pierri; Kosha Modi
    Abstract: This paper relies on administrative data to study determinants and implications of US banks’ Information Technology (IT) investments, which have increased six-fold over two decades. Large and small banks had similar IT expenses a decade ago. Since then, large banks sharply increased their spending, especially those which were more exposed to competition from fintech lenders. Other local-level and bank-level factors, such as county income and bank income sources, also contribute to explain the heterogeneity in IT investments. Analysis of the mortgage market reveals that fintechs’ lending behavior is more similar to that of non-bank financial intermediaries rather than IT-savvy banks, suggesting that factors other than technology are responsible for the differences between banks and other lenders. However, both IT-savvy banks and fintech lend to lower income borrowers, pointing towards benefits for financial inclusion from higher IT adoption. Banks’ IT investments are also shown to matter for the responsiveness of bank lending to monetary policy.
    Keywords: IT Adoption; Fintech Competition; Financial Inclusion; Monetary Policy; banks' IT investment; IT-savvy bank; tech spend; IT bank; Fintech; Mortgages; Loans; Income; Bank credit; Global
    Date: 2022–12–09
  18. By: Park, Ji Hye (Korea Institute for Industrial Economics and Trade)
    Abstract: As the demand for non-face-to-face services has increased due to the COVID-19 pandemic, the conversion of offline services into online services has accelerated. Along with these changes in service provision and consumption behavior, people’s desire to have online experience that are similar to offline experiences online has also increased. The metaverse is currently attracting attention as a new technology that can satisfy this. The metaverse is a portmanteau of meta, which means transcendence and virtuality, and universe and refers to a virtual world that transcends reality. The metaverse has been mentioned as a next-generation service to succeed the Internet, and global companies such as Meta, Apple, and Microsoft are launching related technologies and services. In addition, as 5G services and metaverse-related technologies have been improved, an environment has been established to experience services similar to reality in virtual space. Currently, the metaverse is spreading mainly in content industries such as games, performances, Fortnite, and ZEPETO. Concerts and fan meetings, which were once only possible offline, are also being held on metaverse platforms. Users can create and sell content themselves, and in the metaverse individuals are able to actually engage in economic activities in combination with blockchain technology. This paper describes the salient features of metaverse technologies, the current status of the metaverse at home and abroad, and the direction of the next-generation content industry in the era of the metaverse.
    Keywords: metaverse; online services; technology; Korea; content industry; Meta; online games; Fortnite; cultural content
    JEL: L63 L83 O14 O33
    Date: 2023–01–10
  19. By: Amroush, Fadi
    Abstract: Blockchain is a revolutionary and commonly used technology nowadays. Blockchains are used in many fields, especially financial ones. Tokens are one application of blockchains that represents assets or access rights. Smart contracts and an underlying distributed ledger are used to manage tokens. In this paper, the differences between and the usages of utility and security tokens are discussed in depth. The problems of utility tokens and the ICO boom are mentioned as well. We also discuss how security tokens outweigh the benefit of utility tokens where companies and startups can use them as a standardized solution without suffering from utility tokens’ problems.
    Keywords: utility tokens, security tokens, blockchain, ICO, STO, ICO boom
    JEL: O31
    Date: 2022–05–17
  20. By: Park, Ji Hye (Korea Institute for Industrial Economics and Trade)
    Abstract: Webtoons, a digital cartoon format that originated in Korea, are now the global spotlight, having been established as next-generation hallyu content. As the consumption and supply of webtoons has expanded due to the spread of COVID-19 and the promotion of digital transformation, the size of the domestic webtoon industry grew 64.6 percent year-on-year in 2020, exceeding KRW 1 trillion. The webtoon industry is in full swing, with the domestic internet platforms Naver and Kakao dominating the market. Both have launched overseas services based on webtoon-specialized platforms. This paper we discusses future strategies and directions for webtoons’ effective entry into the global market, and strategies for establishing a system for continued growth in this sector.
    Keywords: webtoons; cultural content; cartoons; comics; digital comics; digital media; digital content; content creation; Korea; hallyu; Korean culture; content industry; intellectual property; manga; anime; animation; comics; publishing; OTT; platform media
    JEL: L00 L10 L80 L82 L86 L88
    Date: 2022–12–01
  21. By: Cho, Jaehan (Korea Institute for Industrial Economics and Trade); Frederick, Stacy (Duke University - Center on Globalization, Governance, & Competitiveness); Jung, Sunin (Korea Institute for Industrial Economics and Trade); Kim, Hanhin (Korea Institute for Industrial Economics and Trade)
    Abstract: Although Korea is home to globally competitive multinational enterprises (MNEs), it is hard to say there is a globally competitive digital enterprise from Korea. While large and well-known Korean MNEs such as Samsung Electronics, LG Electronics, and SK Hynix are globally known in the area of IT devices and components, when it comes to the digital sectors, including internet platforms, digital solutions providers, digital content platforms and e-commerce more broadly, it is hard to identify one as a truly global player. According to UNCTAD (2017), digital companies’ overseas sales accounted for 70 percent of their total global market value and about 50 percent of their global assets. Presumably, these firms’ businesses are largely globalized. However, while Korean IT companies have a higher ratio of overseas sales compared to other top 100 global companies, among these firms there are no large digital enterprises operating in overseas markets. The impact of digital companies is not limited to those firms’ industries or domestic markets; they also play a key role in expanding to global markets and creating new businesses or sectors. Investments in digital sectors will have a significant influence on productivity and employment both directly and indirectly across industries in the era of the fourth industrial revolution. As the recent expansion of digital companies continues across all industries in addition to the incumbent sector, an in-depth understanding and analysis of these trends is required. And in Korea especially, given its relatively small domestic market, it is necessary to enter and compete in global markets in the face of constant industrial change. While Korea’s historical development centered on large corporations, understanding the new dynamics in GVCs brought about by the digital sector will be essential to ensure the country’s continued participation in those very same value chains. Due to a lack of well-organized data, few studies on digital companies have been conducted in Korea. This also stems from the fact that digital companies are a relatively new concept. Basic concepts and tools to evaluate the status of digital companies objectively are needed, given the recent rise of those companies in the global economy. This paper is designed to provide a foundation and starting point to understand digital companies, to aid in the conduct of follow-up research and to frame future policies for digital industries.
    Keywords: digital enterprise; digital industry; digital sector
    JEL: L25 O33
    Date: 2023–01–08
  22. By: Oliver, Dr
    Abstract: As a result of digital technologies, many Asian countries are in a position to enhance their competitiveness and promote economic growth by increasing their use of these technologies. As a research paper, the paper focuses on the development of digitalization in the modern economy of Asia, as well as its impact on the economic processes that determine the economic growth of the country. As long as people are capable of interpreting and adapting the impact of digitalization, we will be able to observe the impact of digitalization. A person has to be able to make judicious decisions when it comes to their finances, so he or she needs to be financially literate. As more and more people transact their financial transactions over the Internet, digital financial literacy has become an increasingly important skill. By leveraging the potential of digitalization, we have the possibility of changing a business model and creating new revenue-generating and value-creating opportunities. There will be an emphasis on the effects of digitalization on the MSME and service sectors in this paper, as well as how industry 4.0 has not been implemented to a greater extent as a result of digitalization having an impact on the MSME and service sectors. In order to understand why digitization is so important and which sectors have been affected and how we can as a nation emerge as the third largest economy in the near future, we must understand why digitisation is so important and what sectors have been impacted. In addition, digitalisation has assisted in the increasing use of e-wallets as well as bringing transparency to financial transactions. There is significant potential for Asian public finance to improve in the years to come with the advent of digitalisation, which is highly correlated with good institutions and performance. The fact that there is a risk of erosion of the tax base does not mean that policies that increase data sharing and withholding mechanisms cannot be introduced as a way of mitigating these risks.
    Keywords: Digital revolution and economic development, digitisation and economic impact in Asia, digitisation for competitiveness, Asian economy and digital journey
    JEL: F6 F62 F68 O1 O10 O14 O2 O20 O4 O42
    Date: 2023–01–05
  23. By: Santoro, Fabrizio; Lees, Adrienne; Carreras, Marco; Mukamana, Theonille; Hakizimana, Naphtal; Nsengyiumva, Yves
    Abstract: Many low-income countries are increasingly digitising various tax services, usually motivated by efforts to increase efficiency and transparency and reduce the burden of compliance for taxpayers. However, where awareness and adoption are suboptimal, tax e services may produce only partial benefits. In this paper, we examine the adoption of tax e-services in Rwanda, a low-income country which has invested significant resources in digitalising government service delivery and made tax e-services mandatory from 2015. Using a combination of panel survey and tax administrative data, we study the drivers and impacts of e-services awareness and adoption. We find evidence that, before the pandemic, female and less educated taxpayers, with less sophisticated businesses, were left behind in technology adoption, even where e-services were the only option for taxpayers. Exploiting the outbreak of COVID-19 during our data collection, we also study shifts precipitated by a shock that normalised digital transactions. Take-up of e-services is remarkable two years after the pandemic, but still not universal. For those not using the e services the same challenges in access persist – indicating the potential for more targeted policy interventions. Interestingly, technology adoption is not strongly related with filing behaviour, and we study the reasons why non-filers report using the tools and, on the contrary, why active filers report they do not. Also, we do not find any significant impact of e-services adoption on perceived fairness of the tax system and overall willingness to pay, which we hypothesised benefit from e-services. Finally, using evidence from qualitative interviews, we highlight practical challenges in using e-services, such as connectivity problems and slow systems, which undermine the potential benefits.
    Keywords: Governance,
    Date: 2023
  24. By: Wassima Lakhchini (Université Hassan 1er [Settat], ENCGS - Ecole Nationale de Commerce et de Gestion de SETTAT); Rachid Wahabi (Université Hassan 1er [Settat]); Mounime El Kabbouri (Université Hassan 1er [Settat]); Casa Bp; Settat Hassan
    Abstract: In the 2020s, Artificial Intelligence (AI) has been increasingly becoming a dominant technology, and thanks to new computer technologies, Machine Learning (ML) has also experienced remarkable growth in recent years; however, Artificial Intelligence (AI) needs notable data scientist and engineers' innovation to evolve. Hence, in this paper, we aim to infer the intellectual development of AI and ML in finance research, adopting a scoping review combined with an embedded review to pursue and scrutinize the services of these concepts. For a technical literature review, we goose-step the five stages of the scoping review methodology along with Donthu et al.'s (2021) bibliometric review method. This article highlights the trends in AI and ML applications (from 1989 to 2022) in the financial field of both developed and emerging countries. The main purpose is to emphasize the minutiae of several types of research that elucidate the employment of AI and ML in finance. The findings of our study are summarized and developed into seven fields: (1) Portfolio Management and Robo-Advisory, (2) Risk Management and Financial Distress (3), Financial Fraud Detection and Anti-money laundering, (4) Sentiment Analysis and Investor Behaviour, (5) Algorithmic Stock Market Prediction and High-frequency Trading, (6) Data Protection and Cybersecurity, (7) Big Data Analytics, Blockchain, FinTech. Further, we demonstrate in each field, how research in AI and ML enhances the current financial sector, as well as their contribution in terms of possibilities and solutions for myriad financial institutions and organizations. We conclude with a global map review of 110 documents per the seven fields of AI and ML application.
    Keywords: Artificial Intelligence, Machine Learning, Finance, Scoping review, Casablanca Exchange Market
    Date: 2022–12–18
  25. By: Mr. Damiano Sandri; Mr. Francesco Grigoli
    Abstract: We analyze the impact of monetary policy on consumer spending using credit card data. Because of their high frequency, these data improve identification and allow for a precise characterization of the transmission lags. We find that shocks to short-term interest rates affect spending much more rapidly than shocks to longer-term interest rates. We also detect significant asymmetries. While interest rate rises are contractionary, interest rate cuts are unable to lift spending. Finally, by exploiting the disaggregation of credit card data, we uncover considerable heterogeneity in the effects of monetary policy across spending categories and a stronger impact on higher-income users.
    Keywords: Credit card spending; heterogeneity; monetary policy; transmission; credit card data; IMF working paper research Department; interest rate cut; impact of monetary policy; interest rate rise; Consumer credit; Asset prices; Monetary tightening; Consumption; Negative interest rates
    Date: 2022–12–16
  26. By: Mr. Serhan Cevik
    Abstract: The COVID-19 pandemic has been an unprecedented shock to economic activity with abrupt and unexpected changes in household consumption behavior. This paper investigates how the spread of the pandemic and government interventions have affected consumer spending using daily card transaction data in the Baltics. The analysis shows significant effects on the amount and composition of debit and credit card transactions. First, the number of new COVID-19 infections or deaths has a strongly negative effect. Second, while public health measures designed to contain the spread of the pandemic has a negative effect, economic support measures designed to assist businesses and households have a stimulative effect. Third, there is heterogeneity across spending categories, but the drop is mostly concentrated in sectors that are restricted by lockdowns and the risk of infection. Fourth, the impact of government interventions, especially in terms of stimulating consumer spending, appears to be more pronounced on goods than services.
    Keywords: Pandemic; consumer spending; card transactions; Baltics; Estonia; Latvia; Lithuania; euro area; transition economies; household consumption behavior; credit card transactions; stimulating consumer spending; government intervention; consumer spending pattern; credit card transaction data; COVID-19; Consumer credit; Consumption; Household consumption
    Date: 2022–12–02
  27. By: Bilal Ahmed Jathol (NEOMA - Neoma Business School); Véronique Favre-Bonté (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc)
    Abstract: How Changes in Entrepreneurial Orientation can Explain Pivots during the Internationalization of Digital Technology-Based Born Globals Most theories of strategic change focus on established firms. Little research examines how early-stage entrepreneurs decide to change their strategies and pivot in an international context (Kirtley & O'Mahony, 2019). To better understand how Born Globals (BG) pivot during their rapid internationalization, we study digital technology-based mobile game development BGs. We found that pivots are mostly driven by changes in individual Entrepreneurial Orientation (EO) components. Using effectuation/causation theory, this study contributes to the understanding of both pivots in born globals and the role of changes in individual EO components over time.
    Abstract: La mayoría de las teorías de cambio estratégico se centran en las empresas establecidas. Solo pocas investigaciones examinan cómo los emprendedores emergentes deciden cambiar su estrategia y pivotar en un contexto internacional (Kirtley - O'Mahony, 2019). Para entender mejor cómo pivotan las Born Globals (BG) durante su rápida internacionalización, estamos estudiando el desarrollo de las BG en la industria de los videojuegos. Encontramos que los pivotes son causados principalmente por cambios en los componentes individuales de la orientación empresarial (OE). Utilizando la teoría de la efectuación/causalidad, este estudio contribuye a la comprensión no solo de los pivotes en las BG, sino también del papel de los cambios en los componentes individuales de la OE a lo largo del tiempo.
    Abstract: La plupart des théories du changement stratégique se concentrent sur les entreprises établies. Peu de recherches examinent comment les entrepreneurs en phase de démarrage décident de changer de stratégie et de pivoter dans un contexte international (Kirtley & O'Mahony, 2019). Pour mieux comprendre comment les Born Globals (BG) pivotent pendant leur internationalisation rapide, nous étudions le développement de BG de l'industrie du jeux vidéo. Nous constatons que les pivots sont principalement provoqués par des changements dans les composantes individuelles de l'orientation entrepreneuriale (OE). En utilisant la théorie de l'effectuation/causation, cette étude contribue à la compréhension à la fois des pivots dans les BG mais aussi du rôle des changements dans les composantes individuelles de l'OE au fil du temps.
    Keywords: entrepreneurial orientation, pivots, born-globals, internationalization, Orientación empresarial, pivotes, Born Globals, Internacionalización, orientation entrepreneuriale
    Date: 2022–05–25
  28. By: Thomas Dierckx; Jesse Davis; Wim Schoutens
    Abstract: In this study, we predict next-day movements of stock end-of-day implied volatility using random forests. Through an ablation study, we examine the usefulness of different sources of predictors and expose the value of attention and sentiment features extracted from Twitter. We study the approach on a stock universe comprised of the 165 most liquid US stocks diversified across the 11 traditional market sectors using a sizeable out-of-sample period spanning over six years. In doing so, we uncover that stocks in certain sectors, such as Consumer Discretionary, Technology, Real Estate, and Utilities are easier to predict than others. Further analysis shows that possible reasons for these discrepancies might be caused by either excess social media attention or low option liquidity. Lastly, we explore how our proposed approach fares throughout time by identifying four underlying market regimes in implied volatility using hidden Markov models. We find that most added value is achieved in regimes associated with lower implied volatility, but optimal regimes vary per market sector.
    Date: 2022–12
  29. By: Roger Vicquéry
    Abstract: This paper quantifies the relative dominance of global currencies and the competitive structure of the international monetary system since 1825. I find the post-1945 experience of dollar hegemony to have no historical precedent. No currency has ever maintained such a large, long-lasting lead over global currency rivals. Close competitors frequently challenged the previous hegemon, the pound sterling. I confirm the dollar temporarily overtook the sterling for the first time in the mid-1920s. Among previously overlooked episodes of monetary competition, I highlight the rise of the French franc in the 1850s and 1930s as well as of the German mark in the 1870s. In light of the recent debate on the costs and benefits of a multipolar international monetary system, I document a positive correlation between higher global currency competition and the prevalence of financial crises, which is however highly dependent on specific sub-periods.
    Keywords: International Monetary System, Long Run, Dollar Hegemony, Multipolarity
    JEL: F3 F4 N2 E5
    Date: 2022

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.