nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2023‒04‒17
24 papers chosen by

  1. Digital Merchant Payments as a Medium of Tax Compliance By Bernad, Ludovic; Nsengiyumva, Yves; Byinshi, Benjamin; Hakizimana, Naphtal; Santoro, Fabrizio
  2. Does going cashless make you tax-rich? Evidence from India's demonetization experiment By Satadru Das; Lucie Gadenne; Tushar Nandi; Ross Warwick
  3. Mobile Internet and the Rise of Political Tribalism in Europe By Marco Manacorda; Guido Tabellini; Andrea Tesei
  4. Money velocity, digital currency, and inflation dynamics By Danny Hermawan; Denny Lie; Aryo Sasongko; Richard I. Yusan
  5. The Economic Value of User Tracking for Publishers By Rene Laub; Klaus M. Miller; Bernd Skiera
  6. Pricing of myopic multi-sided platforms: theory and application to carpooling By Guillaume Monchambert
  7. Big tech credit and monetary policy transmission: micro-level evidence from China By Yiping Huang; Xiang Li; Han Qiu; Changhua Yu
  8. Noisy signals: do ratings’ volatility depend on the length of the consumption span? By David Boto-García; Veronica Leoni
  9. Forecasting the movements of Bitcoin prices: an application of machine learning algorithms By Hakan Pabuccu; Serdar Ongan; Ayse Ongan
  10. Preferences and Attitudes towards Debt Collection: A Cross-Generational Investigation By Minou Goetze; Christina Herdt; Ricarda Conrad; Stephan Stricker
  11. Internet users’ perception about the impact of the pandemic on sports sponsorship. By Pierre Genest; Léo Trespeuch
  12. Statistical error bounds for weighted mean and median, with application to robust aggregation of cryptocurrency data By Michaël Allouche; Mnacho Echenim; Emmanuel Gobet; Anne-Claire Maurice
  13. Symptom or Culprit? Social Media, Air Pollution, and Violence By Xinming Du
  15. Quality Signals in Participative Financing – How Crowdfunding Supports Economically Viable and Sustainable Ventures By Siebeneicher, Sven
  16. Implications of pricing and fleet size strategies on shared bikes and e-scooters: a case study from Lyon, France By Ouassim Manout; Azise Oumar Diallo; Thibault Gloriot
  17. NFT Bubbles By Andrea Barbon; Angelo Ranaldo
  18. Combining Risk Adjustment with Risk Sharing in Health Plan Payment Systems: Private Health Insurance in Australia By Josefa Henriquez; Richard C. van Kleef; Andrew Matthews; Thomas McGuire; Francesco Paolucci
  19. International Sanctions and Dollar Dominance By Javier Bianchi; César Sosa-Padilla
  20. The moderating effect of fan engagement on the relationship between fan knowledge and fan co-creation in social media By Mohsen Behnam; Geoff Dickson; Vahid Delshab; Anna Gerke; Parvaneh Savari Nikou
  21. Labor Markets during War Time: Evidence from Online Job Ads By Tho Pham; Oleksandr Talavera; Zhuangchen Wu
  22. The Impact of Qualitative Reviews on Racial Statistical Discrimination: Evidence from Airbnb By Morris, J.
  23. Network and Text Analysis on Digital Trade Agreements By Lee, Kyu Yub; Lee, Cheon-Kee; Choi, Won Seok; Eom, Jun-Hyun; Whang, Unjung
  24. At the Right Time:Eliminating Mismatch between Cash Flow and Credit Flow in Microcredit By Hisaki KONO; Abu SHONCHOY; Kazushi TAKAHASHI

  1. By: Bernad, Ludovic; Nsengiyumva, Yves; Byinshi, Benjamin; Hakizimana, Naphtal; Santoro, Fabrizio
    Abstract: Consumers in Africa increasingly pay for their purchases through mobile money, especially since the pandemic. These transactions are known as digital merchant payments. Rwandan consumers can choose between using standard mobile money services or a specific service only for digital merchant payments – MoMo Pay. Digital payments of any kind have the potential to improve tax compliance, because they imply digital data trails and better record keeping. How far is this potential being realised in Rwanda? In collaboration with the Rwanda Revenue Authority, we collected survey data from 1, 100 merchants country-wide and were able to correlate this with tax administrative data, i.e. the tax records of the interviewees held by the revenue authority. We also conducted focus group discussions with 15 merchants. We found that the great majority of payments are still made in cash. Larger, more knowledgeable and financially included merchants opt for MoMo Pay as opposed to standard mobile money, the latter being preferred by female and less educated and equipped merchants. At the start of the pandemic, in March 2020, for a period of 18 months, all fees on MoMo Pay transactions were waived to foster digital payments through the service. In September 2021, fees were then reintroduced. The waiver led to a significant rise in the use of MoMo Pay relative to cash. When the MoMo Pay fee was reintroduced, there was a significant shift back to cash from both MoMo Pay and standard mobile money services, even if the latter were not affected by the fee. Lastly, we measure whether the adoption of digital payments correlates with merchants’ tax perceptions and compliance behaviour. First, we show that merchants using MoMo Pay tend to disagree with the obligation of paying taxes in order to receive public services, a measure of fiscal reciprocity. Such negative correlation is probably due to the fee imposed on MoMo Pay. Furthermore, standard mobile money usage improves the perceived ease of complying with taxes, while that is not the case for MoMo Pay. Again, the fact that fees on MoMo Pay are not clearly identifiable in MoMo Pay statements complicates merchants’ reporting and reconciliation of their activity for tax purposes. When it comes to compliance behaviour with VAT, the adoption of digital payments by merchants only improves their reported VAT sales and inputs, and only in the short term, while final VAT liability does not change. This hints at perverse compensating strategies to avoid taxes. We recommend that the tax administration better understand the adoption patterns of digital payments and incentivise usage among less equipped categories of taxpayers. The tax administration would also benefit from getting access to mobile money data to better monitor and enforce merchants’ compliance.
    Keywords: Finance,
    Date: 2023
  2. By: Satadru Das (Reserve Bank of India); Lucie Gadenne (Queen Mary University of London); Tushar Nandi (Indian Institute of Science Education and Research (IISER)); Ross Warwick (Institute for Fiscal Studies)
    Abstract: This paper investigates the effect of electronic payment technology on tax compliance in a large developing economy. We consider India's demonetization policy which, by limiting cash availability, led to a large increase in the use of electronic forms of payments. Using administrative data on firms' tax returns and variation in the strength of the demonetization shock across local areas, we find that greater use of electronic payments leads to firms reporting more sales to the tax authorities. Our estimates imply that the shift to electronic payments increased reported sales by 5% despite demonetization's negative effect on economic activity.
    Keywords: tax compliance, electronic payments, demonetization
    JEL: H26 O23 H25
    Date: 2022–10–21
  3. By: Marco Manacorda (School of Economics and Finance, Queen Mary University of London); Guido Tabellini (Department of Economics and IGIER, Bocconi University;); Andrea Tesei (School of Economics and Finance, Queen Mary University of London)
    Abstract: Abstract: We study the political effects of the diffusion of mobile Internet between 2007 and 2017, using data on electoral outcomes and on mobile Internet signal across the 84, 564 municipalities of 22 European countries. We find that access to mobile Internet increased voters’ support for right-wing populist parties and for parties running on extreme socially conservative platforms, primarilyin areas with greater economic deprivation. Using survey data, we also show that mobile Internet increased communitarian attitudes, such as nationalism and dislike of strangers and minorities. We conclude that mobile Internet benefitted right-wing populist parties because, in line with findings in social psychology, it fostered offline tribalism.ity.
    Keywords: Populism, Communitarianism, Europe, mobile Internet.
    JEL: D72 D91 L86
    Date: 2022–08–04
  4. By: Danny Hermawan; Denny Lie; Aryo Sasongko; Richard I. Yusan
    Abstract: This paper empirically investigates the impact of transaction cost-induced variations in the velocity of money on inflation dynamics, based on a structural New Keynesian Phillips curve (NKPC) with an explicit money velocity term. The money velocity effect arises from the role of money, both in physical and digital forms, in reducing the aggregate transaction costs and facilitating purchases of goods and services. We find a non-trivial aggregate impact in the context of the Indonesian economy: our benchmark estimates suggest that a 10% decrease in money velocity, which might be facilitated by a new digital currency (e.g. CBDC) issuance, would reduce the inflation rate by 0:6-1:7%, all else equal. Using the estimates and within a small-scale New Keynesian DSGE model, we analyze the potential implications of a CBDC issuance on aggregate fluctuations. A CBDC issuance that conservatively lowers the velocity of money by 5% is predicted to permanently raise the GDP level by 0:8% and lower the inflation rate by 0:8%. Both nominal and real interest rates are also permanently lower. Our findings imply that central banks could potentially use CBDCs as an additional stabilization policy tool by influencing the velocity.
    Keywords: inflation dynamics; transaction cost; velocity of money; digital money; digital currency; central bank digital currency (CBDC); aggregate fluctuations;
    Date: 2023–03
  5. By: Rene Laub; Klaus M. Miller; Bernd Skiera
    Abstract: Regulators and browsers increasingly restrict user tracking to protect users privacy online. Such restrictions also have economic implications for publishers that rely on selling advertising space to finance their business, including their content. According to an analysis of 42 million ad impressions related to 111 publishers, when user tracking is unavailable, the raw price paid to publishers for ad impressions decreases by about -60%. After controlling for differences in users, advertisers, and publishers, this decrease remains substantial, at -18%. More than 90% of the publishers realize lower prices when prevented from engaging in user tracking. Publishers offering broad content, such as news websites, suffer more from user tracking restrictions than publishers with thematically focused content. Collecting a users browsing history, perceived as generally intrusive to most users, generates negligible value for publishers. These results affirm the prediction that ensuring user privacy online has substantial costs for online publishers; this article offers suggestions to reduce these costs.
    Date: 2023–03
  6. By: Guillaume Monchambert (LAET - Laboratoire Aménagement Économie Transports - UL2 - Université Lumière - Lyon 2 - ENTPE - École Nationale des Travaux Publics de l'État - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper investigates pricing decisions when a monopolistic multi-sided platform is myopic, that is unable to distinguish between two agents who participate on the same side of the platform but produce different externalities. We find that the structure of prices is the same for profit- and welfare-maximizing platforms. The unique price supplied to the two undistinguishable agents is a weighted average of the perfect information prices, where the weights depend on demand elasticities and externalities produced by the other undistinguishable agent. The prices supplied to the distinguishable agents are also affected by information asymmetry through an extra term than can be positive or negative. Introducing Hotelling competition does not affect results. We apply the model to a monopolistic short-distance carpooling platform with and without HOV lane, and show that the profit-maximizing platform does not subsidize efficiently the "good" side of the market, leading to very little traffic reduction. These results call for a discussion of the regulation of myopic platforms in general, and those of carpooling in particular.
    Keywords: Network effect, Information asymmetry, Externality, Working Papers du LAET
    Date: 2023–02–14
  7. By: Yiping Huang; Xiang Li; Han Qiu; Changhua Yu
    Abstract: This paper studies monetary policy transmission through BigTech and traditional banks. By comparing business loans made by a BigTech bank with those made by traditional banks, it finds that BigTech credit amplifies monetary policy transmission mainly through the extensive margin. Specifically, the BigTech bank is more likely to grant credit to new borrowers compared with conventional banks in response to expansionary monetary policy. The BigTech bank's advantages in information, monitoring, and risk management are the potential mechanisms. In addition, the usage of BigTech credit is associated with a stronger response of firms' sales in response to monetary policy.
    Keywords: financial technology, monetary policy transmission, bank lending
    JEL: G21 E52 G23
    Date: 2023–03
  8. By: David Boto-García; Veronica Leoni
    Abstract: This paper investigates the informational content of online reviews. For the case of hotels, we model how the length of the stay shapes the variance of review scores. Grounded on violations of temporal monotonicity, errors in recall and hedonic adaptation theories, we first present a characterization of how the consumption span affects the non-deterministic component of consumer satisfaction. Next, we conduct an empirical analysis using more than 525, 000 individual reviews from in 5 major European cities. Under a heteroskedastic framework, we document that individual ratings’ volatility decreases with the length of the stay. This implies that online ratings from short stayers (short consumption episodes) are noisy signals of the underlying hotel quality. Furthermore, we show that greater volatility in hotel ratings translates into a lower share of useful reviews for subsequent consumers. Our findings offer relevant insights for platform design operators about the sources of ratings’ volatility and how this affects social learning.
    JEL: D12 D83 Z30
    Date: 2023–03
  9. By: Hakan Pabuccu; Serdar Ongan; Ayse Ongan
    Abstract: Cryptocurrencies, such as Bitcoin, are one of the most controversial and complex technological innovations in today's financial system. This study aims to forecast the movements of Bitcoin prices at a high degree of accuracy. To this aim, four different Machine Learning (ML) algorithms are applied, namely, the Support Vector Machines (SVM), the Artificial Neural Network (ANN), the Naive Bayes (NB) and the Random Forest (RF) besides the logistic regression (LR) as a benchmark model. In order to test these algorithms, besides existing continuous dataset, discrete dataset was also created and used. For the evaluations of algorithm performances, the F statistic, accuracy statistic, the Mean Absolute Error (MAE), the Root Mean Square Error (RMSE) and the Root Absolute Error (RAE) metrics were used. The t test was used to compare the performances of the SVM, ANN, NB and RF with the performance of the LR. Empirical findings reveal that, while the RF has the highest forecasting performance in the continuous dataset, the NB has the lowest. On the other hand, while the ANN has the highest and the NB the lowest performance in the discrete dataset. Furthermore, the discrete dataset improves the overall forecasting performance in all algorithms (models) estimated.
    Date: 2023–03
  10. By: Minou Goetze; Christina Herdt; Ricarda Conrad; Stephan Stricker
    Abstract: Preliminary research indicated that an increasing number of young adults end up in debt collection. Yet, debt collection agencies (DCAs) are still lacking knowledge on how to approach these consumers. A large-scale mixed-methods survey of consumers in Germany (N = 996) was conducted to investigate preference shifts from traditional to digital payment, and communication channels; and attitude shifts towards financial institutions. Our results show that, indeed, younger consumers are more likely to prefer digital payment methods (e.g., Paypal, Apple Pay), while older consumers are more likely to prefer traditional payment methods such as manual transfer. In the case of communication channels, we found that older consumers were more likely to prefer letters than younger consumers. Additional factors that had an influence on payment and communication preferences include gender, income and living in an urban area. Finally, we observed attitude shifts of younger consumers by exhibiting more openness when talking about their debt than older consumers. In summary, our findings show that consumers' preferences are influenced by individual differences, specifically age, and we discuss how DCAs can leverage these insights to optimize their processes.
    Date: 2023–03
  11. By: Pierre Genest (UQTR - Université du Québec à Trois-Rivières); Léo Trespeuch (UQTR - Université du Québec à Trois-Rivières)
    Abstract: Internet users' perception of the impact of the pandemic on sports sponsorship has been topical since the sports sector was one of the first affected by Covid-19. Companies also seem to be changing the way they communicate. By analyzing 400 comments on different social media (Facebook and Twitter), this research has shown that the pandemic is positively affecting the comments of Internet users linked to the publications of partner companies. Consistent with Demirel and Erdogmus (2016), our results tend to suggest that supporters allow for rather positive comments about followed players. Indeed, the comments are imbued with empathy for the athletes who have been affected by the Covid-19. In addition, the other athletes benefit from a majority of positive comments for the supported during this crisis. This observation allows us to highlight a reduction in the negativity of the pandemic in the comments of Internet users.
    Abstract: La perception des internautes face à l'impact de la pandémie sur le mécénat sportif est d'actualités puisque le secteur des sports fût l'un des premiers touchés par la Covid-19. Les entreprises semblent également changer leur mode de communication. Par l'analyse de 400 commentaires sur différents médias sociaux (Facebook et Twitter), cette recherche a mis en lumière que la pandémie affecte positivement les commentaires des internautes liés aux publications des entreprises partenaires. Conformément avec Demirel et Erdogmus (2016), nos résultats tendent à démontrer que les supporteurs offrent des commentaires plutôt positifs concernant les joueurs suivis. En effet, les commentaires sont empreints d'empathies pour les athlètes ayant été touchés par la Covid-19. De plus, les autres athlètes bénéficient d'une majorité de commentaires positifs pour les appuyer durant cette crise. Ce constat nous permet de souligner une réduction du négativisme de la pandémie pour les entreprises qui ont noué et maintenu leur partenariat avec les sportifs.
    Keywords: Sponsors, sponsorship, Covid-19, pandemic, internet users, Parrainage, mécénat, pandémie, internautes
    Date: 2022
  12. By: Michaël Allouche (Kaiko); Mnacho Echenim (LIG - Laboratoire d'Informatique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes, Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Emmanuel Gobet (CMAP - Centre de Mathématiques Appliquées - Ecole Polytechnique - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique); Anne-Claire Maurice (Kaiko)
    Abstract: We study price aggregation methodologies applied to crypto-currency prices with quotations fragmented on different platforms. An intrinsic difficulty is that the price returns and volumes are heavytailed, with many outliers, making averaging and aggregation challenging. While conventional methods rely on Volume-Weighted Average Prices (called VWAPs), or Volume-Weighted Median prices (called VWMs), we develop a new Robust Weighted Median (RWM) estimator that is robust to price and volume outliers. Our study is based on new probabilistic concentration inequalities for weighted means and weighted quantiles under different tail assumptions (heavy tails, sub-gamma tails, sub-Gaussian tails). This justifies that fluctuations of VWAP and VWM are statistically important given the heavy-tailed properties of volumes and/or prices. We show that our RWM estimator overcomes this problem and also satisfies all the desirable properties of a price aggregator. We illustrate the behavior of RWM on synthetic data (within a parametric model close to real data): our estimator achieves a statistical accuracy twice as good as its competitors, and also allows to recover realized volatilities in a very accurate way. Tests on real data are also performed and confirm the good behavior of the estimator on various use cases.
    Keywords: robust aggregation, weighted mean and quantile estimation, heavy tails, concentration inequalities, outliers
    Date: 2023–03–07
  13. By: Xinming Du
    Abstract: This paper provides the first causal evidence that hostile activities online lead to physical violence. Given the recently documented relationship between pollution and social media, I exploit exogenous variation in local air quality as the first step to instrument for online aggression. In an event study setting, I find volatile organic compounds (VOCs) increase by 7% when refineries experience unexpected production outages. Together with higher air pollution, I find more aggressive behaviors both online and offline, as well as worse health outcomes near refineries. A one standard deviation increase in surrounding VOCs leads to 0.16 more hate crimes against Black people and 0.23 more hospital visits per thousand people each day. Second, I consider how emotional contagion spreads through social networks. On days with pollution spikes, surrounding areas see 30% more offensive and racist tweets and 12% more crimes; those geographically distant but socially networked regions also see offensive and racist tweets increase by 3% and more crimes by 4.5%. Nationally, overlooking spillovers would underestimate crime effects of pollution by 24%. My findings highlight the consequences of social media hostility and contribute to the public debate on cyberspace regulation.
    Date: 2023
  14. By: Gilles Pache (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon)
    Abstract: A new stage in the evolution of e-commerce, quick commerce (or Q-commerce) is expanding rapidly on several continents. Its business model is based on ultrafast delivery since the online shopper receives the product between 10 and 15 minutes after ordering via an application on his/her smartphone. Q-commerce introduces a real supply chain revolution thanks to the promise of a much shorter delivery time than in traditional e-commerce. However, this reactivity introduces a double constraint: Q-commerce companies can only offer their shoppers a very limited product assortment, and the preparation of orders requires the presence of multiple micro-fulfillment centers, or dark stores, in the heart of cities. This research note proposes a reflection on the stakes and the future of Q-commerce, by underlining that the product assortment policy, in other words the retailer's offer strategy, is strongly conditioned by the efficient organization of the logistical operations.
    Keywords: Logistics, Q-commerce, Ultrafast delivery, Dark stores, Last mile
    Date: 2022–12
  15. By: Siebeneicher, Sven
    Abstract: Participative financing, in terms of crowdfunding and crowdinvesting, has the potential to contribute to the sustainable development of society. The effectiveness of participative financing for sustainable development depends on the success of individual financing campaigns. Trust is a crucial factor for the success of campaigns. In addition, the campaigns’ contribution to sustainable development and whether it is economically viable are decisive factors. Based on these three criteria, this dissertation investigates quality signals for increasing the supporters’ trust in campaigns. The dissertation investigates to what extent participative financing can contribute to sustainable development and support the development of economically viable ventures. To this end, the dissertation considers four independent studies. The dissertation shows that the ventures’ sustainable and personal value proposition is a quality signal that positively influences the success of the associated campaigns. Supporters of reward-based crowdfunding campaigns are even willing to reduce their personal value in order to contribute to achieving higher sustainable values. Furthermore, the dissertation shows that in the context of lending- and equity-based crowdfunding, sustainable orientation has no effect on the campaigns’ success but positively influences the profitability of ventures. Sustainable orientation positively affects profitability, since the success of sustainably oriented campaigns is almost independent of the interest rate and these ventures can acquire capital at economically more favorable conditions compared to regular ventures. The inclusion of society in sustainable transformation processes is an essential requirement in the Sustainable Development Goals of the United Nations. The opportunities for societal participation could be increasable if established companies integrate participative financing techniques into existing products. A hybrid model could leverage the advantages of established and innovative financing techniques. The dissertation shows that decision-makers of regional banks are willing to offer a hybrid model of participative co-financing. However, it also becomes clear that further tests and experiences regarding the integration of participative financing are necessary to advance the understanding of the potential of participative financing. Finally, the dissertation shows that social interactions in the communities of participative financing platforms have a trust-building effect. Platform participants can exchange information about the ventures’ qualities through interactions, which increases the willingness to participate.
    Date: 2023
  16. By: Ouassim Manout (LAET - Laboratoire Aménagement Économie Transports - UL2 - Université Lumière - Lyon 2 - ENTPE - École Nationale des Travaux Publics de l'État - CNRS - Centre National de la Recherche Scientifique); Azise Oumar Diallo (LAET - Laboratoire Aménagement Économie Transports - UL2 - Université Lumière - Lyon 2 - ENTPE - École Nationale des Travaux Publics de l'État - CNRS - Centre National de la Recherche Scientifique); Thibault Gloriot
    Abstract: In many cities, shared micromobility services (SMMS) have become popular. These services contribute to the popularity of car-alternative mobility by promoting the use of micro-vehicles. Bike-sharing and escooter-sharing systems are examples of these services. Despite their potential, SMMS are still marginal. To unlock this full potential, there is a need to comprehend the implications of the introduction strategies of SMMS on the adoption, use, and profitability of these services. This paper investigates the implications of the size of the fleet and pricing of shared bikes and escooters. This research relies on an agent-based transport simulation framework of Lyon, France. The results show that despite their actual marginal share, SMMS have a non negligible growth potential in Lyon. This potential is actually unfulfilled due to sub-optimal pricing and fleet size strategies. More optimal strategies from the point of view of service providers and customers are discussed in the paper.
    Keywords: Shared micromobility services, E-scooter, Bike-sharing, Pricing, Fleet size, Agent-based
    Date: 2023–03–07
  17. By: Andrea Barbon; Angelo Ranaldo
    Abstract: By investigating nonfungible tokens (NFTs), we provide the first systematic study of retail investor behavior through asset bubbles. Given that NFTs are recorded in public blockchains, we are able to track investor behavior over time, leading to the identification of numerous price run-ups and crashes. Our study reveals that agent-level variables, such as investor sophistication, heterogeneity, and wash trading, in addition to aggregate variables, such as volatility, price acceleration, and turnover, significantly predict bubble formation and price crashes. We find that sophisticated investors consistently outperform others and exhibit characteristics consistent with superior information and skills, supporting the narrative surrounding asset pricing bubbles.
    Date: 2023–03
  18. By: Josefa Henriquez; Richard C. van Kleef; Andrew Matthews; Thomas McGuire; Francesco Paolucci
    Abstract: Health plan payment systems with community-rated premiums typically include risk adjustment, risk sharing or both to compensate insurers for predictable profits (on young and healthy people) and predictable losses (on the elderly and chronically ill). This paper shows how a payment system based only on risk sharing (like in Australia), is improved by combining risk sharing with risk adjustment. Using Australia’s private health insurance market as a case study, we compare and assess the current risk sharing based payment system against alternative systems which combine risk adjustment and risk sharing. Specifically, we develop outcome measures to compare the models in terms of incentives for risk selection and incentives for cost control. We find that a payment system composed of risk adjustment based on simple risk-adjustor variables, supplemented with outlier risk sharing outperforms the current system based solely on risk sharing. Our results show that as more and better data become available, reliance on risk sharing can be reduced whilst the use of risk adjustment can be expanded. In an additional analysis, we show that changes in the payment system affect the redistribution of claims costs across different levels of coverage. We discuss qualitatively additional measures that can be taken to achieve the desired level of redistribution.
    JEL: I11 I13
    Date: 2023–03
  19. By: Javier Bianchi (Federal Reserve Bank of Minneapolis); César Sosa-Padilla (University of Notre Dame and NBER)
    Abstract: This paper investigates the implications of international financial sanctions for the reserve currency status of the US dollar. We propose a simple model of a reserve currency, demonstrate how the anticipation of financial sanctions can weaken the dollar’s status, and evaluate the welfare implications.
    Keywords: International Sanctions, Reserve currency status
    JEL: E42 F31 F32 F34 F41 P48
    Date: 2023–03
  20. By: Mohsen Behnam (Urmia University); Geoff Dickson (La Trobe University); Vahid Delshab (Swinburne University of Technology [Melbourne]); Anna Gerke (Audencia Business School); Parvaneh Savari Nikou (Urmia University)
    Abstract: Purpose Social media has enhanced the ability of fans to interact with each other. Whilst previous research investigates fan co-creation, few studies focus on the interactive effects within the co-creation process. The authors develop a model for synthesizing the interactive concepts related to fan co-creation in social media, which leads to team identification. Design/methodology/approach Participants ( N = 483) were recruited from fans of clubs in the Persian Gulf Pro League of Iran. Structural equation modelling was applied to test the research model. Findings The results showed that fan knowledge facilitates fan co-creation, which in turn leads to team identification. Additionally, fan engagement had a moderating effect on the mediating role of fan co-creation in the association between fan knowledge and team identification. Research limitations/implications The findings suggest that fan knowledge is an important antecedent of fan co-creation and highlight the significance of fan co-creation in promoting team identification in highly engaged fans at football clubs. Originality/value The current study contributes to the field of fan co-creation and provides significant implications for sport fan marketers.
    Keywords: Fan co-creation fan engagement fan knowledge team identification, Fan co-creation, fan engagement, fan knowledge, team identification
    Date: 2023–01–30
  21. By: Tho Pham (University of York); Oleksandr Talavera (University of Birmingham); Zhuangchen Wu (University of Birmingham)
    Abstract: This study examines the short- and medium-term impacts of the ongoing Russia-Ukraine war on the labor market for Ukrainian workers. Using a unique dataset of 5.4 million online job ads for Ukrainian job seekers in Poland and Ukraine over the 2021-2022 period, we show a short-term surge in demand for Ukrainians to work in Poland while the number of jobs in Ukraine is relatively stable. Since February 2022, the demand for soft and analytical skills in Ukraine has increased, while the demand for such skills in Poland has remained the same. Moreover, there is variation in labor demand depending on skills level and occupational gender segregation. Further analysis suggests a persistent shift (to the left) in wage distribution driven by both the decline of wages within job titles and the change in job composition.
    Keywords: labor demand, forced migration, stayers, wage, Ukraine-Russia war, online vacancies
    JEL: J20 J30 J61 N30
    Date: 2023–03
  22. By: Morris, J.
    Abstract: This paper analyses the effect of qualitative reviews on racial statistical discrimination. Using a fine-tuned Bidirectional Encoder Representations from Transformers (BERT) language model that was developed specifically for this task, I include the effects of recent qualitative reviews on the log listing price difference between Black and White hosts on Airbnb. For properties without guest reviews, I find a 4% log listing price difference between Black and White hosts for comparable properties. Once review information becomes available, this pricing difference reduces to 1%, providing evidence against the persistence of racial listing price differences on Airbnb, and furthermore, suggesting that race is used as the primary signal of property quality only in the absence of better information. Beyond its applications within the context of Airbnb, this paper aims to explain how the early provision of detailed qualitative information can reduce the effects of statistical discrimination against minorities.
    Keywords: Airbnb, Discrimination, Race, Online marketplace
    JEL: D83 J15 L84
    Date: 2023–03–22
    Abstract: We use the Trade Agreements Provisions on Electronic Commerce and Data and their corresponding texts to undertake network and text analysis on trade agreements with digital trade chapters to identify which countries are important in the network and how similar or different their texts of digital trade chapters are. centrality values reflect which countries are influential in the network, while values of similarity assess the level of similarity between the texts of digital trade chapters concluded by these countries. Centrality and similarity are complementary in assessing the relative positions of countries in the network, where the number of linkages between countries is significant in centrality and the quality of digital trade chapters is critical in similarity. We interpret this to mean that a country with a high degree of centrality is likely to be a rule-promoter in the network, whereas a country with a high degree of similarity is likely to be a rule-maker. The brief highlights three key findings from network and text analysis of digital trade agreements: (1) The U.S. has been the best rule-maker but not the best rule-promoter, whereas Singapore has been the best rule-promoter but not the best rule-maker. (2) China is a rule-maker, but to a weaker extent than the U.S., and Korea is a rule-promoter, although it is less active than Singapore. (3) Japan and Australia have served as both rule-makers and rule-promoters. Identification of countries’ relative positions in the network of digital trade agreements would be useful at the start of talks on digital trade policy.
    Keywords: Digital Trade Agreement; Network Analysis; Text Analysis
    Date: 2023–02–08
  24. By: Hisaki KONO; Abu SHONCHOY; Kazushi TAKAHASHI
    Abstract: Despite the expansion of microcredit access, its outreach is still limited among farmers. One potential cause is a timing mismatch between cash flow and credit flow. Farmers have little income until their harvest is realized, while standard microcredit requires weekly installment payments. This mismatch causes underinvestment and borrowing for repayment, resulting in lower uptake rates. Furthermore, agricultural investment is sequential, while credit is disbursed as a lump sum. Present-biased (PB) farmers may fail to set aside sufficient money for later investment. To test these predictions, we conducted a randomized control trial modifying standard microcredit targeted at tenant farmers by setting repayment schedules to one-time repayment after harvest and making loan disbursement sequential. Discarding weekly repayment increased uptake and borrower’s satisfaction without worsening repayment rates. Sequential disbursement increased later investments among PB borrowers and reduced loan sizes. We attribute the loan size reduction to the option value: Sequential disbursement allowed borrowers to adjust the total loan size after observing credit demand shocks, eliminating the need for precautionary borrowing. Calibrated models are used to evaluate counterfactual credit designs, showing that letting borrowers set the credit limit is beneficial for PB borrowers, while credit lines will be suboptimal for PB borrowers.
    Keywords: Microcredit; Timing mismatch, Commitment; Option value; Precautionary borrowing
    JEL: G21 O16 Q14
    Date: 2023–03

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.