|
on Payment Systems and Financial Technology |
|
Issue of 2023‒05‒08
thirty-one papers chosen by |
| By: | Raphael Auer; Marc Farag; Ulf Lewrick; Lovrenc Orazem; Markus Zoss; Raphael A. Auer |
| Abstract: | The phenomenal growth of cryptocurrencies raises important questions about their footprint on the financial system. What role are traditional financial intermediaries playing in cryptocurrency markets and what drives their engagement? Are new nodes emerging? We help answer these questions by leveraging a novel global supervisory database of banks’ cryptocurrency exposures and by synthesising a range of complementary data sources for other types of institutions. We find that major banks’ exposures currently remain at very modest levels. Across countries, higher innovation capacity, more advanced economic development, and greater financial inclusion are associated with a higher likelihood of banks taking on cryptocurrency exposures. We show that substantial activity is concentrated in lightly regulated crypto exchanges. This “shadow crypto financial system” serves both retail and institutional clients, such as dedicated investment funds. An uneven regulatory treatment across banks and crypto exchanges and significant data gaps suggest that a proactive, holistic and forward-looking approach to regulating and overseeing cryptocurrency markets is needed. It should focus on ensuring a more level playing field with regard to financial services provided by established financial institutions and intermediaries in the emerging crypto shadow financial system by introducing more stringent regulatory and supervisory oversight for the latter. |
| Keywords: | cryptocurrencies, decentralised finance, digital currencies, financial regulation, financial supervision, exchange stablecoin, Bitcoin, Ethereum |
| JEL: | E42 G12 G21 G23 G28 O33 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10355&r=pay |
| By: | International Monetary Fund |
| Abstract: | The Swedish economy is characterized by high adoption of digital services in the financial sector, as shown by a thriving Fintech sector, and the ongoing analysis on whether to issue a Central Bank Digital Currency (CBDC). This technical note looks at the systemic risks stemming from the potential issuance of CBDC in Sweden, as well as the growing significance of the Fintech sector. This note does not evaluate the benefits of CBDC, or the Fintech sector. |
| Date: | 2023–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2023/134&r=pay |
| By: | Simplice A. Asongu (Yaounde, Cameroon) |
| Abstract: | This study assesses how corporate telecommunication (telecom) policies follow telecom sector regulation in mobile money innovation for financial inclusion in developing countries. Telecom policies are understood in terms of mobile subscriptions, mobile connectivity coverage and mobile connectivity performance while mobile money innovations represent mobile money accounts, the mobile used to send money and the mobile used to receive money. The empirical evidence is based on Tobit regressions. Telecom sector regulation positively influences mobile money innovations. From net influences, mobile subscriptions and connectivity policies moderate telecom sector regulation to positively influence mobile money innovations; exclusively within the remit of mobile money accounts because the corresponding net influences on the mobile used to send money and the mobile used to receive money are negative. The interactive influences are consistently negative and hence, thresholds for complementary policies are provided in order to maintain the positive influence of telecom sector regulation on mobile money innovations. This study has complemented the extant literature by assessing how corporate telecommunication policies follow telecommunication sector regulation in mobile money innovations for financial inclusion. |
| Keywords: | Mobile money; technology diffusion; financial inclusion; inclusive innovation |
| JEL: | D10 D14 D31 D60 O30 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:23/017&r=pay |
| By: | Ozili, Peterson K |
| Abstract: | This paper examines the role of central bank digital currency (CBDC) for poverty reduction and sustainable development. In the paper, I argue that a CBDC can eliminate poverty by increasing financial inclusion which gives poor people access to affordable credit and other basic financial services which they can use to improve their welfare, thereby enabling them to rise above poverty, and achieve the United Nations sustainable development goal of eradicating poverty. This argument is valid only if a central bank digital currency is designed to incorporate features that increase financial inclusion. The argument may not be valid in cases where a CBDC is not designed to increase financial inclusion as is the case in some developed countries. The implication is that a CBDC can lead to poverty reduction only when the CBDC design incorporate features that increase financial inclusion. Policy makers can ensure that the CBDC used in their countries is designed to incorporate features that increase financial inclusion which is vital for poverty reduction and for achieving the United Nations sustainable development goal of eradicating poverty in all its forms. |
| Keywords: | CBDC, central bank digital currency, financial inclusion, poverty reduction, sustainable development goals, United Nations. |
| JEL: | E40 E42 Q01 Q50 Q56 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:117000&r=pay |
| By: | Ozili, Peterson K |
| Abstract: | Abstract This paper investigates the global and local interest in internet information about cryptocurrency and the Nigeria central bank digital currency which is also known as eNaira. Granger causality test and GMM coefficient matrix methodologies were used. The findings reveal that there is sustained increase in global and local interest in internet information about eNaira in the first six weeks after eNaira adoption. Local interest in internet information about cryptocurrency in Nigeria exceeded global interest in internet information about cryptocurrency. The South-East region had the highest interest in cryptocurrency information followed by the South-South, the North-Central, the North-East, the North-West and the South-West regions. In contrast, the North-East region had the highest interest in internet information about eNaira followed by the North-West, the North-Central, the South-West, the South-South and the South-East regions. Nigeria recorded the highest global interest in internet information about cryptocurrency and eNaira while Japan and Brazil recorded the lowest interest during the period. The correlation results show a significant and positive correlation between interest in cryptocurrency information and interest in eNaira information. The granger causality results show that global interest in cryptocurrency information causes both global and local interest in eNaira information. Also, local interest in cryptocurrency information causes global interest in eNaira information. The GMM regression coefficient matrix shows a significant positive relationship between interest in cryptocurrency information and eNaira information. |
| Keywords: | internet, information, trends, eNaira, cryptocurrency, central bank digital currency, CBDC, bitcoin |
| JEL: | G02 G23 G29 O31 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:116978&r=pay |
| By: | Dirk Bergemann (Cowles Foundation, Yale University); Alessandro Bonatti |
| Abstract: | We analyze digital markets where a monopolist platform uses data to match multiproduct sellers with heterogeneous consumers who can purchase both on and off the platform. The platform sells targeted ads to sellers that recommend their products to consumers and reveals information to consumers about their values. The revenueoptimal mechanism is a managed advertising campaign that matches products and preferences efficiently. In equilibrium, sellers offer higher qualities at lower unit prices on than off the platform. Privacy-respecting data-governance rules such as organic search results or federated learning can lead to welfare gains for consumers. |
| Keywords: | Data, Data, Privacy, Data Governance, Digital Advertising, Competition, Digital Platforms, Digital Intermediaries, Personal Data, Matching, Price Discrimination, Automated Bidding, Algorithmic Bidding, Managed Advertising Campaigns, Showrooming |
| JEL: | D18 D44 D82 D83 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2343r&r=pay |
| By: | Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa) |
| Abstract: | The present study investigates how increasing bank accounts and bank concentration affect mobile money innovations in 148 countries. It builds on scholarly and policy concerns in the literature that increasing bank accounts may not be having the desired effects on financial inclusion on the one hand and on the other, that bank concentration which is a proxy for market power is a relevant mobile money innovation demand factor. The empirical evidence is based on Tobit regressions. From the findings, it is apparent that boosting bank accounts is positively related to the three mobile money innovations (i.e. mobile bank accounts and the mobile phone used to send money). Moreover, some critical levels of bank account penetration require complementary policies in order to maintain the positive relationship between boosting bank accountsand positive outcomes in terms of money mobile innovations.Conversely, financial inclusion in terms of the three mobile money innovations is not significantly apparent upon enhancing bank concentration. Policy implications are discussed in the light of the provided thresholds for complementary policies. |
| Keywords: | Mobile money; technology; diffusion; financial inclusion; inclusive innovation, information asymmetry |
| JEL: | D10 D14 D31 D60 O30 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:23/019&r=pay |
| By: | Marc Bourreau; Adrien Raizonville; Guillaume Thébaudin |
| Abstract: | Platform interoperability is considered a powerful tool to promote competition in digital markets when network effects are at play. We study the effect of interoperability on competition between two ad-financed platforms, allowing for endogenous multi-homing of consumers. When the platforms are symmetric and decide non-cooperatively on their level of interoperability, interoperability emerges in equilibrium if the value of multi-homers relative to single-homers is sufficiently low for advertisers. From a welfare perspective, the equilibrium level of interoperability can be either too low or too high. When one (“large”) platform has an installed base of customers, its incentive to make its services interoperable is lower than for the other, smaller platform. However, mandating interoperability between the asymmetric platforms is not always socially optimal. |
| Keywords: | interoperability, platform competition, multi-homing, advertising |
| JEL: | L13 L86 L15 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10332&r=pay |
| By: | Fajri, Mohammad Zen Nasrudin; bin Lahuri, Setiawan; Umam, Khoirul |
| Abstract: | FinTech has currently been used by people around the world for the better transactions process. Islamic Finance Industry need to create a proper Islamic FinTech that can meet the Muslim demand. Many researches have been conducted however, they are still limited. Therefore, it is necessary to conduct further studies using comprehensive analysis tool to better develop Islamic FinTech. This study aims to discover bibliographic keywords and research flow in Islamic FinTech studies. Furthermore, it aims to suggest some directions for future researches. The data is collected from Google Scholar database using Publish or Perish, while bibliometric analysis is conducted using VOSviewer. It is revealed that blockchain, bank, application, COVID and intention are the most used keywords in researches. The existing literature is grouped into four discussions, discussions on FinTech in Islamic Finance Industry, the use of blockchain technology, the analysis of behavior of Islamic FinTech users and the model development of Islamic FinTech and its roles in economy. And based on these results, some directions for future research can be resulted. The future research can be done on the measures in addressing issues in implementing FinTech in Islamic Finance Industry, empirical analysis of the implications of successful blockchain implementation, behavioral changes of consumption in Islamic FinTech users and the effect of Islamic FinTech on Islamic Finance growth as well as macroeconomic variables. |
| Date: | 2022–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:2unsb&r=pay |
| By: | Hermawan, Danny; Lie, Denny; Sasongko, Aryo; Yusan, Richard |
| 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; |
| JEL: | E31 E32 E41 E42 E50 E51 E58 |
| Date: | 2023–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:116906&r=pay |
| By: | Simplice A. Asongu (Yaounde, Cameroon); Sara le Roux (Oxford Brookes University, Oxford, UK) |
| Abstract: | The study examines how mobile money innovations transform unemployed women to self-employed women. The empirical evidence is based on interactive quantile regressions focusing on data in 44 countries from sub-Saharan Africa for the period 2004 to 2018. The hypothesis that mobile money innovations transform female unemployment to female self-employment is tested. Eight mobile money innovation dynamics presented in four categories are employed. Three main common findings are apparent from interactions between female unemployment, eight mobile money innovation dynamics and female self-employment: (i) the investigated hypothesis is valid exclusively at the top quantiles of female self-employment; (ii) the net effects are consistently negative and (iii) the corresponding conditional or interactive effects upon which the net effects are based are consistently positive. This is an indication that critical masses at which money innovation innovations have an overall positive net effect on female self-employment are apparent. The corresponding mobile money innovation policy thresholds at which the net effects on female self-employment change from negative to positive are provided. Policy implications are discussed. |
| Keywords: | Mobile phones; financial inclusion; women; inequality; sub-Saharan Africa |
| JEL: | G20 O40 I10 I20 I32 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:23/016&r=pay |
| By: | Zhimeng Yang; Ariah Klages-Mundt; Lewis Gudgeon |
| Abstract: | We investigate the theoretical and empirical relationships between activity in on-chain markets and pricing in off-chain cryptocurrency markets (e.g., ETH/USD prices). The motivation is to develop methods for proxying off-chain market data using data and computation that is in principle verifiable on-chain and could provide an alternative approach to blockchain price oracles. We explore relationships in PoW mining, PoS validation, block space markets, network decentralization, usage and monetary velocity, and on-chain liquidity pools and AMMs. We select key features from these markets, which we analyze through graphical models, mutual information, and ensemble machine learning models to explore the degree to which off-chain pricing information can be recovered entirely on-chain. We find that a large amount of pricing information is contained in on-chain data, but that it is generally hard to recover precise prices except on short time scales of retraining the model. We discuss how even a noisy trustless data source such as this can be helpful toward minimizing trust requirements of oracle designs. |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2303.16331&r=pay |
| By: | Emine Hanedar; Cristian Alonso; Gerardo Uña; Dinar Prihardini; Tanuj Bhojwani; Kateryna Zhabska |
| Abstract: | Foundational digital public infrastructure (DPI), consisting of unique digital identification, payments system and data exchange layer has the potential to support the transformation of the economy and support inclusive growth. India’s foundational DPI, called India Stack, has been harnessed to foster innovation and competition, expand markets, close gaps in financial inclusion, boost government revenue collection and improve public expenditure efficiency. India’s journey in developing a world-class DPI highlights powerful lessons for other countries embarking on their own digital transformation, in particular a design approach that focuses on shared building blocks and supporting innovation across the ecosystem. |
| Keywords: | Digitalization; digital payments; digital ID; govtech |
| Date: | 2023–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2023/078&r=pay |
| By: | Ali, Hassnian; Aysan, Ahmet Faruk; Yousef, Tariq M |
| Abstract: | The potential implications of central bank digital currencies (CBDCs) on Silicon Valley Bank (SVB) are vast, particularly when it comes to oversight of the bank. This paper aims to explore how the introduction of CBDCs could have impacted SVB and its eventual collapse. The introduction of CBDCs has the potential to disrupt traditional banking systems, which could impact the stability of the financial industry. However, CBDCs can also provide real-time monitoring and oversight, which could help to prevent bank failures. This paper examines the potential impact of CBDCs on SVB and how it could have been impacted by the real-time monitoring provided by the Federal Reserve. The findings suggest that the introduction of CBDCs could have helped to prevent the collapse of SVB by allowing for real-time monitoring and oversight. The implications of this research are significant, as it highlights the potential benefits of CBDCs in preventing future banking failures and strengthening financial stability. |
| Keywords: | SVB, CBDCs, Federal Reserve, Digital Bank Run |
| JEL: | G28 H12 O32 |
| Date: | 2023–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:116937&r=pay |
| By: | Ajit Desai; Zhentong Lu; Hiru Rodrigo; Jacob Sharples; Phoebe Tian; Nellie Zhang |
| Abstract: | Modernizing Canada’s wholesale payments system to Lynx from the Large Value Transfer System (LVTS) brings two key changes: (1) the settlement model shifts from a hybrid system that combined components of both real-time gross settlement (RTGS) and deferred net settlement (DNS) to an RTGS system; (2) the policy regarding queue usage changes from discouraging it to encouraging the adoption of the new liquidity-saving mechanism. We utilize this unique opportunity to quantitatively assess the effects of those changes on the behaviour of participants in the high-value payments system. Our analysis reveals the following: (1) At the system level, most payments are settled in a single stream with the liquidity-savings mechanism in Lynx—facilitating liquidity pooling and leading to higher efficiency than LVTS where payments were distributed in two streams. Moreover, due to Lynx’s liquidity-saving mechanism, many payments arrive earlier than those in LVTS, providing more opportunities for liquidity saving at the cost of slightly increased payment delay. (2) At the participant level, the responses are rather heterogeneous; however, our analysis suggests that liquidity efficiency is improved for several participants, and most experience slightly longer payment delays in Lynx than in LVTS. |
| Keywords: | Financial institutions; Financial services; Financial system regulation and policies; Payment clearing and settlement systems |
| JEL: | E42 G28 C10 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:23-24&r=pay |
| By: | Lioba Heimbach; Eric Schertenleib; Roger Wattenhofer |
| Abstract: | Lending protocols in decentralized finance enable the permissionless exchange of capital from lenders to borrowers without relying on a trusted third party for clearing or market-making. Interest rates are purely set by the supply and demand of capital according to a pre-defined function. In the lead-up to The Merge: Ethereum blockchain's transition from proof-of-work (PoW) to proof-of-stake (PoS), a fraction of the Ethereum ecosystem announced plans of continuing with a PoW-chain. Owners of ETH - whether their ETH was borrowed or not - would hold the native tokens on each chain. This development alarmed lending protocols. They feared spiking ETH borrowing rates would lead to mass liquidations which could undermine their viability. Thus, the decentralized autonomous organization running the protocols saw no alternative to intervention - restricting users' ability to borrow. We investigate the effects of the merge and the intervention on the two biggest lending protocols on Ethereum: AAVE and Compound. Our analysis finds that borrowing rates were extremely volatile, jumping by two orders of magnitude, and borrowing at times reached 100% of the available funds. Despite this, no spike in mass liquidations or irretrievable loans materialized. Further, we are the first to quantify and analyze hard-fork-arbitrage, profiting from holding debt in the native blockchain token during a hard fork. We find that arbitrageurs made 13 Mio US$, money that was effectively extracted from the platforms' lenders. Finally, we identify alarming security risks to the entire Ethereum ecosystem. Around one-fifth of the staked ETH through LIDO (stETH) was locked as collateral on lending protocols. Mass liquidations caused by spiking rates would have devastating effects on the stETH price and pose security concerns for the consensus layer, as staking power could be bought at a significant discount. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2303.08748&r=pay |
| By: | Bruno Biais (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique); Christophe Bisière (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Matthieu Bouvard (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Catherine Casamatta (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Albert J. Menkveld (Unknown) |
| Abstract: | We offer an overlapping generations equilibrium model of cryptocurrency pricing and confront it to new data on bitcoin transactional benefits and costs. The model emphasizes that the fundamental value of the cryptocurrency is the stream of net transactional benefits it will provide, which depend on its future prices. The link between future and present prices implies that returns can exhibit large volatility unrelated to fundamentals. We construct an index measuring the ease with which bitcoins can be used to purchase goods and services, and we also measure costs incurred by bitcoin owners. Consistent with the model, estimated transactional net benefits explain a statistically significant fraction of bitcoin returns. |
| Date: | 2023–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04067665&r=pay |
| By: | Brian Jabarian; Elia Sartori |
| Abstract: | In a stylized voting model, we establish that increasing the share of critical thinkers -- individuals who are aware of the ambivalent nature of a certain issue -- in the population increases the efficiency of surveys (elections) but might increase surveys' bias. In an incentivized online social media experiment on a representative US population (N = 706), we show that different digital storytelling formats -- different designs to present the same set of facts -- affect the intensity at which individuals become critical thinkers. Intermediate-length designs (Facebook posts) are most effective at triggering individuals into critical thinking. Individuals with a high need for cognition mostly drive the differential effects of the treatments. |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2303.16422&r=pay |
| By: | Byrne, Shane (Central Bank of Ireland); Kelly, Jane (Central Bank of Ireland); Pratap Singh, Anuj (Central Bank of Ireland) |
| Abstract: | Consumers who switch providers can often get a better deal on their insurance. We show how price changes, time constraints, misperceptions that loyalty is rewarded and behavioural characteristics such as status-quo bias can help to explain engagement and switching in the private car and home insurance markets. Motivated by an interest in understanding any potential barriers to future digital adoption, we examine a range of factors associated with consumers who report discomfort in purchasing insurance online and find that these consumers are, on average, older, lower income, and less educated. |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:cbi:ecolet:8/el/22&r=pay |
| By: | Cano, Melissa Renau; Espelt, Ricard; Morell, Mayo Fuster |
| Abstract: | The emergence of platform work has provided new opportunities for job creation, yet it also poses numerous challenges, thereby placing the topic at the centre of the policy debate. At the same time, discussion of the platform economy usually fails to acknowledge the coexistence of different platform models and their diverse socioeconomic impact with regard to the SDGs and the European Pillar of Social Rights (EPSR). This paper aims to contribute to the debate on regulating platform work by testing the ‘Charter of digital workers’ rights’ arising from the Platform Labour in Urban Spaces (PLUS) European project, in three platform cooperatives: Fairbnb.coop, SMart, and Katuma. The empirical analysis and testing are based on qualitative surveys, co-creation sessions and interviews. The analysis could prove useful for further EU policy, national transposition of EU legislation and potential legislation worldwide. The results show the importance of providing a clear-cut definition of platform work, as well as considering different platform models. More specifically, the paper reflects on the definition and fair scheduling of working time (total amount of working hours, scheduling and disconnection), fair and decent remuneration, the right to information on contractual conditions and the right to transparency in algorithmic systems, and training rights. |
| Date: | 2023–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:9aycp&r=pay |
| By: | Saki Bigio (UCLA; NBER) |
| Abstract: | This paper introduces an endogenous network of payments chains into a business cycle model. Agents order production in bilateral relations. Some payments are executed immediately. Other payments, chained payments, are delayed until other payments are executed. Because production starts only after orders are paid, chained payments induce production delays. In equilibrium, agents choose the amount of chained payments given interest rates and access to internal funds or credit lines. This choice determines the payments-chain network and aggregate total-factor productivity (TFP). The paper characterizes equilibrium dynamics and their innate inefficiencies. Agents internalize the direct costs of their payment delays, but do not internalize the costs induced onto others. This externality produces novel policy insights and rationalizes permanent reductions in TFP under excessive debt. |
| Keywords: | Payments, Networks, Business Cycles |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:apc:wpaper:185&r=pay |
| By: | Ofori, Isaac K.; Gbolonyo, Emmanuel Y.; Dossou, Marcel A. T.; Nkrumah, Richard K.; Nkansah, Emmanuel |
| Abstract: | The study employs macro data for 42 African countries to examine the interactive and threshold effects of financial development in the remittances-inclusive growth relationship. First, evidence based on the system GMM estimator shows that remittances are not statistically significant in promoting inclusive growth in Africa. Notably, across the economic growth and income inequality dimensions of inclusive growth, we find that although remittances are ineffective in boosting the former, they deepen the latter. Second, we find that Africa’s underdeveloped financial sector dampens the marginal positive effect of remittances on inclusive growth. Third, our threshold analysis indicates that for financial development to interact with complementary policies to foster inclusive growth in Africa, a minimum threshold of 14.5% is required. We conclude by informing policy on the level of investments needed for financial development to promote fairer income growth and distribution in Africa. |
| Keywords: | Africa, Financial Development, Inclusive Growth, Income Inequality, GMM, Remittances. |
| JEL: | F22 F24 G21 I3 N27 O11 O55 |
| Date: | 2023–04–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:116958&r=pay |
| By: | Nishant Krishna; Garg, Amit; Gaurav Kumar Kedia; Aprajita Mishra |
| Abstract: | This paper discusses the Token Economics around the GAU Coin. All the aspects of Token Economics, including rewards system, incentivisation, ways to increase adoption, methods to measure social impact, strategies to bring the developer community into the ecosystem, commodity flows, and many others are discussed. Various GAU Coin Ecosystem Partners and Enablers and how they interact with the ecosystem are also identified. Later, GAU NFT for the participants of the GAU Coin network can also be thought of, along with creating the entire network of artists and infrastructure around it. GAU Coin is a Social Token and is not a Cryptocurrency. The GAU Coin represents the digital form of what a person owns as part of the GAU ecosystem and brings Social Credibility. |
| Date: | 2023–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:iim:iimawp:14691&r=pay |
| By: | Van Overbeke, Toon |
| Abstract: | AI and other forms of automation are causing a shift into a more capital-intensive form of capitalism. Many scholars have suggested that we can best understand this process as the cost-efficient substitution of labour by capital in routine tasks based on relative factor costs. However, this model, which has cast firms as endlessly chasing the productivity frontier, has not paid sufficient attention to cross-national divergences in technological changes. This paper builds a comparative historical case study tracing the divergent introduction of credit scoring in British and German bank branches to argue that the introduction of credit scoring was a result of a policy-led process in both countries. Increased liberalisation of financial market institutions benefitted the rise of market-led banking which fundamentally changed the business model of banks resulting in a devaluation of the services provided by branch managers. This case suggests we need to think about the role of politics and policy within our, often deterministic, models of labour-saving technological change. |
| Keywords: | automation; comparative political economy; credit-scoring; market-led banking |
| JEL: | F3 G3 |
| Date: | 2022–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:114993&r=pay |
| By: | Ms. Longmei Zhang; Hector Perez-Saiz |
| Abstract: | The paper examines the usage of the Renminbi (RMB) as an international payment currency. Globally, the use of RMB remains small, accounting for 2 percent of total cross-border transactions. Using country-level transaction data from Swift** for 2010–21, we find significant regional variations in the use of RMB for cross-border payments. While RMB is little used in some regions, it has gained traction in others, and these cross-country differences have widened over the years. Such differences can be partly explained by an economy’s geographic distance, political distance, and trade linkages with China. However, it also reflects the impact of policy measures by the People’s Bank of China, including establishing bilateral swap lines and offshore clearing banks. Both policy measures helped to address offshore RMB liquidity shortages given China’s overall capital account restrictions, with the offshore clearing banks having a quantitatively larger impact. Our analysis contributes to a better understanding of the growing importance of RMB within the international monetary system. |
| Keywords: | RMB internationalization; Swift; Swap lines; Offshore Clearing Banks |
| Date: | 2023–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2023/077&r=pay |
| By: | Voraprapa Nakavachara; Roongkiat Ratanabanchuen; Kanis Saengchote; Thitiphong Amonthumniyom; Pongsathon Parinyavuttichai; Polpatt Vinaibodee |
| Abstract: | Psychologists and economists have both explored how past outcomes influence subsequent risktaking behavior. However, psychologists traditionally focused on gambling, while economists mainly looked at investors’ decisions under uncertainty. As a result, the two fields arrived at different conclusions. Psychology literature identified loss-chasing behavior among casino gamblers and labeled it “compulsive gambling, †a disorder requiring treatment. Economists, on the other hand, introduced a concept of the “realization effect, †suggesting that risk-taking may increase after an unrealized loss but decrease after a realized loss (Imas, 2016). This paper aims to reconcile these two perspectives using empirical evidence from the cryptocurrency market, where gamblers and investors coexist. We find that high-risk individuals increase risk-taking after both unrealized and realized losses. In the most severe case, a one-standard-deviation increase in loss would raise risk-taking, as measured by portfolio volatility, by 58.72%. Thus, high-risk individuals in the cryptocurrency market behave like casino gamblers observed in Psychology literature. On the other hand, low-risk individuals increase risk-taking only after unrealized losses and avoid risks after realized losses. Thus, low-risk individuals in the cryptocurrency market behave like investors facing risky choices, which can be explained by the “realization effect†in Economics literature. |
| Keywords: | Cryptocurrency; Realization Effect; Loss-Chasing; Behavioral Finance |
| JEL: | D81 G11 G41 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:pui:dpaper:206&r=pay |
| By: | Ozili, Peterson K |
| Abstract: | This study investigates whether social inclusion policies promote financial inclusion. Three social inclusion policies were analyzed: gender equality policies, environmental sustainability policies and social protection policies. The study used the panel fixed effect regression methodology to analyse data from 48 low- and medium-income countries. It was found that social inclusion policies did not have a significant effect on financial inclusion, implying that social inclusion policies do not promote financial inclusion. The older population are less likely to own an account at a formal financial institution in low and medium-income countries that have strong environmental sustainability policies and institutions. The implication of the finding is that the social policies and institutions established to promote environmental sustainability can discourage the older population from keeping their wealth in formal financial institutions. |
| Keywords: | financial inclusion, social inclusion, financial development, social policies, institutions. |
| JEL: | D60 G21 Z0 Z13 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:116971&r=pay |
| By: | Ron Berman (University of Pennsylvania - The Wharton School); Aniko Oery (Cowles Foundation, Yale University); Xudong Zheng (Johns Hopkins University, Department of Economics) |
| Abstract: | We compare influencer marketing to targeted advertising from information aggregation and product awareness perspectives. Influencer marketing leverages network effects by allowing consumers to socially learn from each other about their experienced content utility, but consumers may not know whether to attribute promotional post popularity to high content or high product quality. If the quality of a product is uncertain (e.g., it belongs to an unknown brand), then a mega influencer with consistent content quality fosters more information aggregation than a targeted ad and thereby yields higher profits. When we compare influencer marketing to untargeted ad campaigns or if the product has low quality uncertainty (e.g., belongs to an established brand), then many micro influencers with inconsistent content quality create more consumer awareness and yield higher profits. For products with low quality uncertainty, the firm wants to avoid information aggregation as it disperses posterior beliefs of consumers and leads to fewer purchases at the optimal price. Our model can also explain why influencer campaigns either "go viral" or "go bust, " and how for niche products, micro-influencers with consistent content quality can be a valuable marketing tool. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2358&r=pay |
| By: | International Monetary Fund |
| Abstract: | The Swedish financial market infrastructure (FMI) is modern, stable, well-developed, and subject to regulation and to the CPMI-IOSCO Principles for Financial Market Infrastructures (PFMI). |
| Date: | 2023–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2023/136&r=pay |
| By: | International Monetary Fund |
| Abstract: | Sweden's financial sector is highly digitalized and interconnected, and related technological developments heighten cyber threats and vulnerabilities. The cyber threat landscape has evolved, with many Swedish financial institutions victims of Distributed Denial of Service (DDoS) attacks. Wider, more destructive attacks are likely in the near future. |
| Date: | 2023–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2023/135&r=pay |
| By: | Cham, Yaya |
| Abstract: | Limitations of domestic Monetary Policies in The Gambia highlight the challenges faced by developing countries in managing their domestic economies in the context of bank lending as well as financial globalisation. The high level of financial integration with global markets, brought about by globalisation and advancements in science and technology, means that domestic monetary policies in developing countries have a limited impact on managing the domestic economies, as interest rates and exchange rates are increasingly influenced by global factors beyond the control of domestic monetary and fiscal policies . As such, these countries experience challenges in managing inflation and promoting economic growth. At the same time, scientific advancements and technology have facilitated financial globalisation and made it easier for banks to lend to customers in different countries, but these developments have also raised concerns about the regulation of cross-border lending and the potential for financial instability in the global financial system. It has become increasingly important for affected countries to put in place policies and strategies that shield their economies from these external shocks and influences to allow them to control inflation and promote economic growth. |
| Keywords: | Financial Globalization, Bank Lending, Domestic Monetary Policy and The Gambia |
| JEL: | F6 G2 N1 |
| Date: | 2023–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:117026&r=pay |